Manila: Focusing on measures to address climate change and manage risks from artificial intelligence (AI) will help drive the Philippine economy's expansion after a slowdown in the third quarter of 2025, an economist said Wednesday.

According to Philippines News Agency, ASEAN+3 Macroeconomic Research Office (AMRO) Chief Economist Dong He stated that the economy remains on a steady growth path but has yet to return to its pre-pandemic pace. The gross domestic product (GDP) growth slowed to 4 percent in the third quarter of 2025, down from 5.5 percent in the previous quarter and 5.2 percent a year earlier. The slowdown was partly due to weather-related disruptions and lower government spending following corruption issues linked to flood control projects.

These factors prompted AMRO to cut its 2025 growth forecast for the Philippines to 5.2 percent from 5.6 percent, and its 2026 forecast to 5.3 percent from 5.5 percent. He emphasized that additional measures to strengthen resilience against climate change and adapt to AI are needed, as the economy has not fully regained its pre-pandemic growth capacity.

He further explained that a strong policy framework and prioritized spending plans would support growth, restore investor confidence, and encourage private investment. He noted, "Private consumption has been quite firm, and we continue to believe that private consumption will remain firm."

Given the Philippines' significant role in the business process outsourcing (BPO) sector, He stressed the need to upgrade human capital to harness AI while mitigating its potential impact on jobs. "All these require strong public investment or public-private partnerships, and that requires very strong policy frameworks, prioritized spending plans and targeted projects that would strengthen the economy's capacity. And that would end up in higher public and the private investments," He said.