Forecast Update: Local and global factors’ tug of war

The Philippine economy grew slower than expected in the first quarter, as recovery in consumption and surging government spending were offset by weak exports and investment.

Following the start of the Bangko Sentral ng Pilipinas’ (BSP) monetary easing in August last year, we expect its full impact to materialize in the next quarters through increased private investment and household spending.

Read: GDP Update: Underwhelming growth to prompt more rate cuts

On the sectoral side, the agricultural sector is projected to rebound, as we expect more favorable weather conditions this year post the 2024 El Niño episode.

These will provide a boost to the economy.

However, downside risks remain and may even outweigh upside momentum. Heightened uncertainty and the bleak global economic outlook should cap domestic gross domestic product (GDP) growth, as the tariff war shows no sign of de-escalating.

While we believe favorable economic conditions will support domestic demand, challenges on the external front should act as a sizable counterweight.

Metrobank trims its full year GDP growth forecast for 2025 to 5.7% from the previous 5.8%, and for 2026 to 6.1% from the previous 6.2%.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)