The Philippines is projected to be the second fastest-growing economy in Southeast Asia this year and the next, although the pace of expansion is expected to slow from last year amid uncertainties stemming from external developments, according to the ASEAN+3 Macroeconomic Research Office (AMRO).
In the Quarterly Update of the ASEAN+3 Regional Economic Outlook, AMRO said it expects the Philippine economy to grow by 5.6 percent this year.
The forecast falls within the government’s target growth range of 5.5 to 6.5 percent for this year.
If AMRO’s forecast is realized, the Philippines would post the second-highest growth in Southeast Asia, next to the projected 7.5-percent expansion for Vietnam this year.
Other ASEAN countries are expected to register slower growth rates than the Philippines, such as Indonesia (five percent), Cambodia (4.9 percent), Laos (4.4 percent), Malaysia (4.3 percent), Singapore (2.6 percent), Thailand (2.2 percent) and Brunei Darussalam (1.2 percent).
For 2026, AMRO expects the Philippine economy to expand at a slightly slower pace of 5.5 percent, below the government’s growth target of six to seven percent.
AMRO’s forecast for the Philippines is the second highest in Southeast Asia, with Vietnam projected to lead the region’s growth with a 6.4-percent expansion next year.
AMRO expects slower growth in 2026 for Indonesia (4.9 percent), Cambodia (five percent), Laos (4.2 percent), Malaysia (four percent), Singapore (1.7 percent), Thailand (1.9 percent), Brunei Darussalam (1.8 percent) and Myanmar (1.5 percent).
Runchana Pongsaparn, group head and lead economist at AMRO, said in a press conference that the growth forecasts for the Philippines for 2025 and 2026 are slower than the 5.7 percent growth posted in 2024 due to the anticipated weakening of exports as tariffs imposed by the United States kick in by the end of the year and next year.
‘But we still expect that the consumption is going to grow quite steadily, supported by the strong labor market, lower inflation and also the still robust remittances as well,’ she said.
She said the AMRO also expects the US tariffs to affect investor sentiment.
‘In terms of the (flood control) scandal, I think we would have to see to what extent it’s actually going to affect the wider economy because if the event is short-lived and then it does not severely affect the investment sentiment, then that could be contained and may not affect the growth forecast materially,’ she said.
While the Philippine economy has been performing quite well, AMRO chief economist Dong He said the challenge for the country is how to bring medium-term growth to higher levels.
He said that higher investments, both from the government and the private sector, are necessary to support faster growth in the medium-term and to address major shocks.
‘The Philippines, because of its geography, is quite exposed to climate risks. Infrastructure really has to be strengthened. Some of these issues with flooding have to do with the infrastructure not being able to deal with these shocks,’ he said.
He said the Philippines would also need to upgrade its business process outsourcing sector, given its important role in the economy and the growing use of artificial intelligence.
‘That would also require the upscaling of human resources in terms of public investment and also private sector investment,’ he said.