Rationale: A slower 2025 growth path demands targeted reforms
The Philippines posted a modest 4% GDP expansion in the third quarter, underscoring headwinds that could drag growth lower in 2025. Inflation volatility, elevated interest rates globally, and the need for faster project execution point to a policy mix that goes beyond short-term stimulus. Experts say the Marcos administration should deploy a coherent program aimed at boosting investment, improving productivity, and expanding the country’s growth potential without repeating past fiscal excesses.
Prioritize investment-friendly reforms
A main driver of faster growth will be increasing private investment. The government can accelerate permitting, streamline land-use approvals, and simplify bureaucratic processes that delay projects. A clear, predictable regulatory environment reduces risk for local and foreign investors and lowers the cost of capital. In parallel, expanding public-private partnerships (PPPs) for infrastructure and social services can mobilize private capital while ensuring essential improvements in transportation, energy, and water systems.
Make tax policy predictable and growth-oriented
Policy certainty matters more than occasional tax cuts. A well-communicated, growth-oriented tax framework that broadens the tax base while preserving competitiveness can spur investment. Targeted incentives for high-impact sectors—manufacturing, green energy, logistics, and digital services—should be time-bound and performance-based, with sunset clauses and measurable outcomes to avoid leakage and undermine fiscal sustainability.
Strengthen energy security and price stability
Energy costs directly influence both consumer prices and business margins. The administration could pursue diversified energy supply, harden the grid against outages, and expand renewable sources where viable. A transparent, market-based approach to power procurement—paired with measures to shield vulnerable groups from volatile prices—could reduce inflationary pressures and create a more attractive environment for manufacturing and export-oriented sectors.
Boost productivity through leverage in agriculture and services
Agriculture remains a sector with high growth potential if modernized. Investments in irrigation, post-harvest facilities, and digital extension services can lift yields and incomes for farmers, reducing rural-urban income disparities and increasing domestic demand. In services, the Philippines’ strengths in business process outsourcing (BPO), tourism, and logistics can be amplified through upskilling programs, better connectivity, and trade facilitation. Export-oriented services and e-commerce logistics are two pillars for resilient growth amid global shifts.
Improve fiscal discipline with targeted spending
A credible path to growth must pair spending with accountability. The government can refocus expenditures on high-impact, output-driven programs—such as road and port upgrades, water security, and health infrastructure—while reducing waste. A transparent evaluation framework that links funding to measurable outcomes helps sustain investor confidence and ensures the budget supports GDP growth rather than only short-term stimulus.
Monetary policy coordination and macro resilience
The central bank should remain focused on price stability and financial sector health, while policy makers coordinate with fiscal authorities to avoid mixed signals that can destabilize growth. A stable monetary environment supports enterprise planning, reduces risk premiums, and helps credit flow to productive firms, including small and medium-sized enterprises that drive job creation.
Strategic messaging and governance
Clear government communication about reform timelines, funding sources, and expected outcomes builds public trust and investor confidence. Regular updates on project progress, procurement reforms, and performance metrics demonstrate accountability and commitment to sustainable growth. Tackling corruption and ensuring transparent procurement processes remains essential for improving the business climate.
Conclusion: A coherent, growth-oriented roadmap for 2025
To arrest slower growth, the Marcos administration should combine smart investment incentives, regulatory efficiency, energy stability, and targeted sectoral reforms. The goal is not merely short-term stimulus but a durable expansion path that raises productivity, expands employment opportunities, and strengthens resilience against external shocks. With disciplined spending, credible reform, and orderly implementation, 2025 can become a turning point toward a higher potential growth trajectory for the Philippine economy.
