BSP forecasts 2025 inflation below target, signals subdued Philippine GDP growth

Inflation stays low as BSP signals stability, but growth forecasts point to a slower 2025 economy.

The Bangko Sentral ng Pilipinas (BSP) expects full-year 2025 inflation to average below the low end of its 2–4 percent target range. This projection is backed by recent data: November’s inflation came in at 1.5 percent, down from 1.7 percent in October and 2.5 percent a year earlier.

The 1.5 percent figure fell comfortably within the BSP’s 1.1–1.9 percent forecast range, signaling continued price stability in the Philippine economy.

The central bank attributed the slowdown largely to falling rice prices in previous months. “Inflation is projected to average below the low end of the target range in 2025,” the BSP said in a statement.

For Filipino consumers, the result means purchasing power remains relatively steady. For businesses, the decrease allows for better planning of expenses and investments with less concern over sudden price surges.

Long-Term Inflation and Price Stability

The BSP expects inflation for 2026 and 2027 to settle within the 3 percent plus or minus 1 percentage point range. Supply-side pressures are expected to ease despite possible electricity rate adjustments and higher tariffs on rice imports. This stability is a key component of the Philippine economic outlook.

Growth Forecasts Remain Muted

Meanwhile, forecasts for Philippine economic growth remain subdued. Financial think tanks across Southeast Asia now expect GDP growth for 2025 to hover around 5 percent or below, failing to meet initial government targets. Economic planners had initially targeted 5.5–6.5 percent for the year.

• Nomura Holdings lowered its GDP estimate to 5.3 percent from 5.6 percent, citing slowed government spending due to concerns about flood control projects.
• DBS Group Research projected even slower growth at 4.7 percent, down from 5.3 percent, noting domestic governance issues and US tariffs as moderating factors.
• The Philippine Institute for Development Studies sees growth reaching 5 percent by Q4, after a slowdown to 4 percent in Q3.

For Filipino businesses, slower Philippine GDP growth could mean more cautious consumer spending and tighter market conditions, prompting firms to focus on cost efficiencies and targeted investments.

The BSP acknowledged that the domestic growth outlook has weakened, signaling governance concerns around public infrastructure spending and lingering uncertainty from the external environment.

“Going forward, the Monetary Board will continue to review newly available information and reassess the impact of prior monetary actions in light of evolving economic conditions and their implications for inflation and growth,” the central bank said.

With reports from Kiara Gorrospe

 

 

The BSP expects 2025 inflation to end below the low end of its 2–4 percent target range, while GDP growth forecasts suggest the economy will expand more slowly than initially projected.

 

 

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