The Philippines is set to achieve upper middle-income status if it can sustain its growth trajectory and meet key targets through strategic investments, policy reforms and a favorable economic environment, according to the Philippine Institute for Development Studies (PIDS).
It said the government’s ability to implement reforms, manage inflationary pressures and boost investor confidence would determine whether it could sustain long-term growth and economic stability.
The PIDS expects the country’s gross domestic product (GDP) to grow 6.1 percent in 2025, bolstered by easing inflation and policy rates that will enhance consumption and investment.
This growth is further fueled by rising household consumption, supported by improved employment, steady remittance inflows and election spending, it said.
The forecasts are detailed in the PIDS study “Macroeconomic Prospects of the Philippines in 2024–2025: Toward Upper Middle-Income Status”. It identifies key drivers of progress such as enhanced macroeconomic stability, effective governance and deeper integration into international trade and investment networks.
Authored by PIDS senior research fellow Dr. John Paolo Rivera, research specialist Mark Gerald Ruiz and research analyst Ramona Maria Miral, the study underscores the critical roles of the robust information technology-business process outsourcing (IT-BPO) sector and the government’s Build, Better, More infrastructure program in driving the country’s economic recovery.
It said central to the recovery is consumer spending, which remains a major growth driver. Backed by a youthful and growing population, stable inflation and consistent remittances from overseas Filipino workers (OFWs), consumer demand is further strengthened by the return of more Filipinos to the workforce and improving wages. Together, these factors create a solid foundation for sustained economic growth.
The study said despite the promising trends, challenges could temper growth in 2025, and chief among them is the global economic slowdown, which poses risks to the demand for Philippine exports.
“The Philippines may see weaker external demand for its exports, particularly in electronics and semi-conductors, which are major contributors to its GDP but are heavily dependent on global supply chains,” the authors said.
The study said to mitigate these risks, the Philippines should strengthen regional ties within the Association of Southeast Asian Nations (ASEAN) and expand trade partnerships with the United States, China and other global players.
The Regional Comprehensive Economic Partnership (RCEP) is crucial in facilitating smoother trade flows and enhancing the country’s access to markets across the Asia-Pacific region, it said.
Inflationary pressures from rising oil prices and supply chain disruptions, coupled with the worsening effects of climate change, pose additional challenges.
Political uncertainties surrounding the 2025 midterm elections may also delay investments and disrupt policy reforms. Skills mismatches in the labor market and the country’s dependence on remittances could further limit economic growth potential, it said.
“Failure to empower the labor force with the skills required for the evolving job market could limit productivity and economic potential,” the authors said.
“A coordinated effort from all sectors is essential to ensuring the Philippines can sustain growth amid global and domestic uncertainties on its path toward upper-middle-income status,” the authors said.
