Despite rising global risks and the ripple effects of new U.S. tariff policies, the Philippine economy is expected to remain the fastest-growing in Southeast Asia this year, with gross domestic product (GDP) growth forecast at 5.4 percent, according to HSBC.
While this is slightly down from HSBC’s earlier projection of 5.6 percent, the adjustment comes after a softer-than-expected first quarter performance. The country posted a 5.4 percent growth in Q1 2025, slower than the 5.9 percent recorded during the same period last year but still an improvement from the 5.3 percent expansion seen in the final quarter of 2024.
HSBC ASEAN economist Aris Dacanay explained that the revised forecast already factors in the potential economic impact of the United States’ proposed 18 percent reciprocal tariffs. He cautioned that such protectionist measures could introduce uncertainty for investors, dampen foreign direct investments, and reduce demand from the U.S.—the world’s largest consumer-driven economy.
However, Dacanay emphasized that several domestic strengths are expected to cushion these external shocks. These include robust household spending, accelerating credit activity, increased capital imports, and the continued decline in inflation. Moreover, the Philippines stands to be less affected by U.S.-China trade tensions, as it does not compete directly with China in exports to the American market.
“We still expect the Philippines to top ASEAN growth in 2025,” Dacanay stated. “While we do not rule out a broader global slowdown, local economic drivers will keep the country’s momentum steady and may even push growth to 5.6 percent in 2026.”
HSBC also projects a stronger second quarter for the Philippines, with growth rebounding to 5.6 percent. This acceleration is attributed to rising consumer and investment activity, growth in services exports, improved debt servicing, and the strategic front-loading of exports ahead of the tariff hike. The Bangko Sentral ng Pilipinas’ easing monetary policy is also seen as a positive force for growth.
“As the global economy braces for a potential slowdown in the second half of 2025, the Philippines appears poised to move against the trend,” Dacanay added.
In Southeast Asia, the Philippines shares the economic stage with Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, and Vietnam—but it continues to distinguish itself with its resilience and strong domestic fundamentals.