Rate cuts to help Philippines hit 7% growth, finance chief says

[MANILA] The Philippine economy can grow as much as 7 per cent this year, aided by interest-rate cuts that will support investment and consumption, according to Finance Secretary Ralph Recto who also brushed aside concerns over political stability.

On Wednesday (Mar 19), Recto said the country’s political situation remains stable. “We do not see that happening. Zero,” he said on the sidelines of the InvestPH 2025 forum in Manila, when asked about the chances of the political situation unravelling and prompting instability after former leader Rodrigo Duterte’s arrest last week over his deadly drug war.

The finance chief, who sits in the seven-member policymaking board of the Bangko Sentral ng Pilipinas (BSP), said he expects a total of 50 to 75 basis points in rate cuts this year and the economy to expand by at least 6 per cent. There is room for the BSP to resume monetary easing at its next meeting on Apr 10, he said.

Inflation, which slowed sharply in February and sits at the low end of the central bank’s 2 to 4 per cent target, remains under control while the peso has been relatively stable, according to Recto.

The central bank sees inflation staying within its target in the next two years, giving monetary authorities “flexibility” to “pursue dialling down policy tightness,” BSP assistant governor Zeno Abenoja said.

The Philippine peso has strengthened around 1 per cent against the US dollar this year. In December, it touched its record low 59, a level that has served as a key support since 2022.

The government aims to raise about 100 billion pesos from the sale of state assets, including a hydroelectric power plant, Recto said.

The finance chief also said there is “very minimal left” of what the government needs to raise from the international bond market for this year.

The Philippines, which has investment-grade sovereign credit ratings, sold US$3.3 billion of dollar and euro bonds in January, raising bulk of its overseas funding requirement for 2025 as it looks to fund a budget deficit of about 1.54 trillion pesos (S$27 billion) this year, equivalent to 5.3 per cent of gross domestic product.

InvestPH 2025 is organised by the Philippine Stock Exchange and co-hosted by Bloomberg LP, the parent company of Bloomberg News. BLOOMBERG