MANILA, Philippines – The Philippine economy is expected to grow faster this year than in 2024 as the 2025 midterm elections fuel household consumption, investment house Unicapital said on Thursday, February 13.

Unicapital’s research head Wendy Estacio-Cruz said in a briefing that the firm expects the Philippines’ gross domestic product (GDP) to grow 6.3% this year, within the government’s target range of 6%-8%.

Estacio-Cruz said the firm sees candidates for both local and national races driving short-term economic activity during the election season.

She added that consumer goods companies often report a 5%-10% boost in their revenues as elections often drive spending on essentials and lifestyle goods.

Other sectors poised to benefit from the polls’ economic activities include construction and infrastructure, media and telecommunications.

“This, coupled with easing inflation, will boost household spending and ultimately favor the economy’s growth this year,” Estacio-Cruz said.

Data from the Philippine Statistics Authority show that household spending dipped in 2024, growing just 4.8% that year. The country has missed its GDP growth targets for two consecutive years.

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The Philippine Stock Exchange index (PSEi) often rallies — or sees sustained gains — during election season due to a boost in liquidity and optimism.

Other factors supporting economic growth

Aside from the elections, economists noted that uncertainties in the global trade scene may dampen economic growth.

Bank of the Philippine Islands’ lead economist Jun Neri cited US President Donald Trump’s recent slapping of tariffs on aluminum and steel imports, as well as the threat of retaliatory tariffs and a looming trade war.

“So this will likely result in some inflationary pressures and may affect the pace of interest rate adjustment by the BSP [Bangko Sentral ng Pilipinas],” Neri explained.

Neri also warned that the market may be prone to profit-taking amid the volatility in global trade.

Despite the uncertainties in international trade brought by Trump’s second term, local economists are still optimistic that domestic policies will help pull the country’s GDP growth within government targets.

Estacio-Cruz cited the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) law as a strong driving force that could boost the local equity market and foreign investments.

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Both Estacio-Cruz and Neri were also optimistic that the BSP will cut 0.50% of the key interest rate this year, despite the monetary authority’s recent pause in rate cuts. (READ: Bangko Sentral unexpectedly keeps policy rates steady at 5.75%)

They also said the peso may drop to P60 against the dollar due to the protectionist policies of the Trump administration.  – Rappler.com