The Bangko Sentral ng Pilipinas (BSP) is confident about the country's growth outlook this year, supported by reduced inflation, robust domestic spending, lower borrowing costs, and a resilient banking sector.

BSP Governor Eli Remolona Jr. said inflation has fallen back within the government's target range of 2-4% and has been steadily decreasing since it peaked at 8.7% in January 2023.

“With inflation back within target, the outlook for economic growth is quite positive. Lower inflation – combined with adequate liquidity and credit as well as improving labour market conditions – is expected to support domestic spending,” he said.

The Philippine economy grew by 5.2% in Q3 last year, a slowdown from the 6.4% growth in the previous quarter. Over the first three quarters, the country's GDP averaged 5.8%.

Economic officials are aiming for a GDP growth of 6-6.5% in 2024, with projections of 6-8% expansion from 2025 to 2028.

Remolona stated that inflation is anticipated to remain within the government's 2-4% target in the medium term, supported by stable core inflation and well-anchored inflation expectations.

“These factors validate the BSP’s shift to a less restrictive monetary policy stance beginning in August 2024. We will continue to monitor the data and possible risks to the inflation outlook to help guide monetary policy moving forward,” he said.

Furthermore, in 2024, the BSP’s Monetary Board reduced borrowing costs by a total of 75 basis points, lowering the key rate from 6.5% to 5.75%.

Prior to these cuts, the central bank had kept its policy rate unchanged for six consecutive meetings since November 2023. From May 2022 to October 2023, the central bank had implemented aggressive rate hikes, raising the rate by a total of 450 basis points to control inflation, The Philippine Star reports.

“We expect that our data- driven monetary policy easing will continue to positively impact the economy throughout the coming year. This will be supported by a sound and stable banking system,” Remolona stated.

He added that the BSP’s monetary easing measures, along with anticipated rate cuts in 2025 as expected by market analysts, will alleviate payment pressures for bank borrowers.