The Philippine economy likely expanded at a ‘tepid’ pace in the third quarter as a string of storms disrupted business activity and an ongoing corruption investigation weighed on confidence, according to economists at the University of Asia and the Pacific.
In their latest Market Call report, the researchers estimated growth at 5.3 percent for the quarter, citing ‘a spate of typhoons and negative sentiments due to the flood control corruption issue.’
They expect momentum to pick up slightly to 5.7 percent in the fourth quarter as economic conditions stabilize.
Dovish BSP
Earlier this month, the Bangko Sentral ng Pilipinas trimmed its benchmark interest rate by a quarter point to 4.75 percent in a move aimed at bolstering sentiment dampened by the graft probe.
With inflation remaining subdued, the economists said the central bank may cut rates by another 25 basis points before the end of 2025, bringing the policy rate to 4.5 percent. Further easing in 2026 could lower it to 4 percent ‘or below,’ they said.
Looking ahead, they said elevated real yields and volatility in US markets could lift demand for Philippine bonds through 2026.
Equities
The stock market, however, is expected to ‘remain subdued’ amid negative headlines, even as underlying fundamentals ‘remain sound.’
‘Potential BSP rate cuts, favorable inflation, and clear legal action on the scandal could boost investor confidence and push the PSE index into the 6,200 to 6,500 range,’ the report said. /dda