Q4 PH growth likely better

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Unlocking the Potential of Philippine Economic Growth A Leatherworkers' Perspective

As we approach the end of 2025, it's crucial to assess the current state of the Philippine economy and its growth prospects for the final quarter. In this blog, we'll provide a comprehensive overview of the situation by examining the latest data and expert opinions.

A Sub-Potential Q4 Forecast The Reality

According to ANZ Research, the Philippines' GDP growth is expected to remain steady at 4.5% year-on-year (y/y) in the fourth quarter, with a quarterly growth rate of 1.5%. This forecast indicates that the country's economic growth will likely fall short of its target, hovering around 4.9% for the full year.

The Flood Control Project Scandal A Weight on Public and Private Spending

The repercussions of the flood control project scandal have far-reaching consequences, extending beyond public spending to households and businesses. As a result, consumer expectations on economic conditions over the next 12 months have declined compared to during the pandemic, while confidence has also taken a hit.

A Domestic Activity Slowdown The Reality Check

While exports are expected to contribute positively to growth, driven by electronics demand and artificial intelligence technology take-up, domestic activity is likely to have slowed down further. This is reflected in declining car sales and consumer goods imports numbers.

Government Spending The Missing Link

Government spending has been a significant contributor to the country's economic growth, but it's now expected to fall anew, weighing on growth in the first six months of 2026. Economic managers are optimistic about a rebound this year, with forecasts indicating a recovery to 5.4% in 2026 and further improvement to 6.0-6.2% in 2027.

A Rate Cut A Double-Edged Sword

ANZ Research suggests that the Bangko Sentral ng Pilipinas (BSP) might deliver one more 25-basis-point rate cut, citing overall growth conditions and weak domestic demand. However, we question the effectiveness of continued monetary policy easing amid low consumer and business confidence.

A Revival in Government Spending The Key to Faster Growth

In our opinion, a revival in government spending is the most appropriate pathway to faster growth. This will not only stimulate public spending but also boost private investment and consumption.

Insights from the Leatherworkers' Community

As leatherworkers, we understand that economic growth has a direct impact on our industry. We believe that the current sub-potential GDP growth presents an opportunity for us to adapt to changing market conditions by diversifying our product offerings, targeting new markets, and creating innovative solutions that cater to evolving consumer needs.

Addressing Potential Counterarguments

Some may argue that a rate cut would stimulate economic growth, but we counter this by highlighting the low consumer and business confidence levels. Others might suggest that government spending is not the solution, citing inefficiencies and corruption. However, we believe that well-managed public spending can have a positive impact on the economy.

Conclusion

In conclusion, while the Philippines' Q4 GDP growth forecast may be sub-potential, it's essential to acknowledge the underlying issues driving this trend. By focusing on government spending as a key driver of growth and addressing the flood control project scandal, we can unlock the potential for faster economic expansion. As leatherworkers, we must adapt to changing market conditions to thrive in an uncertain environment.

Final Statement

As we look to 2026 and beyond, it's crucial that we prioritize government spending as a catalyst for growth. By doing so, we can create a more robust economy that benefits all sectors, including the leatherworkers' community.

Keywords Philippine economic growth, GDP forecast, flood control project scandal, government spending, rate cut, Bangko Sentral ng Pilipinas (BSP), leatherworkers, economic insights.

Meta Description As we approach the end of 2025, it's crucial to assess the current state of the Philippine economy and its growth prospects for the final quarter. In this blog, we'll provide a comprehensive overview of the situation by examining the latest data and expert opinions.

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Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.