The UBS Investment Bank Global Research (UBS IBGR) projects the Philippine economy to grow by 5.9% in 2025, up from 5.6% in 2024, driven by higher investments and rising consumption.
“We see an improving growth outlook for the Philippines,” said Grace Lim, senior ASEAN and Asia economist at UBS IBGR. Lim added that domestic demand drives positive growth “as both investment and consumption accelerate in 2025.”
Easing financial conditions, solid labor income growth, and slowing food inflation will further support this trend. Lim also emphasized the importance of government spending and the expanding BPO industry in sustaining the country’s economic momentum.
Higher tariffs and monetary policy
Despite global trade tensions and potential tariff escalations, the Philippines remains shielded due to its domestic-oriented economy. With investment contributing 23% and consumption over 70% of GDP, the country is less exposed to international trade disruptions.
“The Philippines is primarily domestic-oriented, which makes it a defensive market in the event of potential trade tariff escalation,” Lim said. She noted that the Philippine peso could perform better than other regional currencies if trade conflicts intensify.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) is expected to cut monetary policy rates by 50 basis points this year as inflation eases and stays within target through 2025. A 200-basis point reduction in the reserve requirement ratio for universal and commercial banks, effective March 28, could boost liquidity and enhance financial market sophistication.
BPO’s role in economic growth
The BPO industry is a significant pillar of the country’s economic growth. In 2024, the information technology and business process management (IT-BPM) sector generated $38 billion in export revenue and employed 1.82 million full-time workers. By 2028, the BPO industry could grow into a $59 billion sector with 2.5 million employees.
“The Philippines will continue to benefit from the BPO industry,” Citi Asia South Head Amol Gupte said. He added that the sector creates jobs and strengthens the country’s position in the global capability center industry.
But the rise of artificial intelligence presents opportunities and risks for the sector. As automation advances, the industry must move up the value chain, focusing on higher-skilled roles beyond traditional voice services.
The BPO sector’s resilience and growth potential remain vital to the Philippine economy. As the country navigates global economic challenges and domestic reforms, the industry’s contributions to employment and services exports underscore its role as a cornerstone of sustainable development.
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Gonzales, A. L. (2025, February 27). PH Economic Growth to Accelerate in 2025 – UBS Economist. Inquirer. Retrieved March 25, 2025, from https://business.inquirer.net/508782/ph-economic-growth-to-accelerate-in-2025-ubs-economist
