The Philippines is set to be one of Asia’s fastest-growing economies over the next two years, according to Moody’s Ratings.
In its latest outlook released on Wednesday, Moody’s projected the country’s real GDP to expand by 6.0 percent in 2025 and 2026, solidifying its position as a regional leader in economic growth.
Inflation is expected to remain within the government’s target range of 2 to 4 percent, creating room for further policy rate cuts this year. This, in turn, is anticipated to boost domestic consumption and investment, providing additional momentum for economic expansion.
Moody’s also noted that potential risks from U.S. President Donald Trump’s tariff policies will likely have minimal impact on the Philippines.
“Given the country’s consumption-driven economic structure, we expect the effects of higher U.S. tariffs under the Trump administration to be relatively muted compared to other economies in the region,” the report stated.
The positive economic outlook, with stable inflation and lower interest rates, is expected to drive credit demand and support asset quality in the banking sector.
Moody’s reaffirmed its stable outlook for the Philippine banking system, citing strong economic fundamentals.
“The outlook remains stable as robust economic growth and lower interest rates help mitigate asset quality risks and sustain credit expansion,” Moody’s noted.
The rating agency also expects overall asset quality and capitalization to remain solid while profitability should stay steady throughout the year. Additionally, funding and liquidity conditions are projected to remain stable.
Moody’s emphasized that the probability of government support for the banking sector remains high.
“We anticipate that the government will prioritize systemic stability and extend necessary support to rated banks when needed,” the report concluded.