MANILA — Domestic economic growth is expected to pick up to 4.6 percent in the last quarter of 2025, driven by lower inflation and a seasonal rise in remittances from overseas Filipino workers (OFWs), according to a capital markets research report.

The December 2025 issue of Market Call, a joint publication of the University of Asia and the Pacific (UA&P) and the Business Economics Club, cited higher exports, lower interest rates, and a recovery in government spending as additional contributors to projected growth from October to December.

Job creation is also expected to increase due to higher demand for goods and services during the Christmas season.

In the third quarter of 2025, gross domestic product (GDP) growth slowed to 4 percent, down from 5.5 percent in the previous quarter and 5.2 percent year-on-year.

The report noted that inflation averaged 1.6 percent in the first 11 months of 2025, with November’s rate decelerating to 1.5 percent, down from 2.5 percent a year earlier.

Key interest rates of the Bangko Sentral ng Pilipinas (BSP) were again reduced by 25 basis points on December 11, bringing total cuts since August 2024 to 200 basis points. The target reverse repurchase rate now stands at 4.5 percent, the overnight deposit rate at 4 percent, and the overnight lending rate at 5 percent.

The projected faster growth, the report said, “should encourage stronger consumer spending and boost employment toward year-end.”

“More robust spending and lower current account deficits should drive this, supporting households’ holiday spending along with an employment recovery,” it added.

The seasonal surge in OFW remittances is also expected to strengthen the peso to around 58.50 per US dollar by year-end, although the local currency may weaken early next year. As of the end of November, the peso closed at 58.83 to the dollar, and on Thursday it stood at 58.55. (PNA)