Manila: Domestic growth in the Philippines is projected to accelerate to 4.6 percent in the final quarter of 2025, fueled by lower inflation and an increase in remittances from overseas Filipinos, as indicated by recent capital markets research.

According to Philippines News Agency, a joint publication by the University of Asia and the Pacific (UA and P) and the Business Economics Club, additional factors contributing to the anticipated growth from October to December include higher exports, reduced interest rates, and a resurgence in government spending.

The report also suggests a rise in job creation due to the heightened demand for goods and services during the holiday season. The third quarter saw a slowdown in growth, with gross domestic product (GDP) expanding by only 4 percent, down from 5.5 percent in the previous quarter and 5.2 percent in the same period last year.

Inflation has been kept in check, averaging 1.6 percent for the first 11 months of the year, with November's rate further decelerating to 1.5 percent, compared to 2.5 percent in the previous year. In response to these conditions, the Bangko Sentral ng Pilipinas (BSP) reduced key rates by 25 basis points on December 11, marking a cumulative 200 basis points cut since August 2024.

This monetary easing has adjusted the target reverse repurchase rate to 4.5 percent, the overnight deposit rate to 4 percent, and the overnight lending rate to 5 percent. The accelerated growth rate is expected to boost consumer spending and employment as the year ends, supported by more robust spending and decreased current account deficits.

The report also highlights that the seasonal influx of remittances from overseas Filipino workers (OFWs) is likely to strengthen the peso to 58.50 against the US dollar by the year's end, although a weakening is anticipated in early 2026. By the end of November, the peso was valued at 58.83 per US dollar, closing at 58.55 on Thursday.