Despite easing inflation and a reported increase in consumer loans by 24% due to a surge in credit card use (Bangko Sentral ng Pilipinas, 2025), private consumption is forecasted to weaken in 2025, with a growth rate of 4.81 %. A steady decline in domestic consumer demand is also projected until the end of 2025. Both unemployment (4.1%) and underemployment (14.6%) have increased based on the recent data released by the Philippine Statistics Authority (PSA) in April 2025. Private consumption is expected to uptick in 2026 by 5.08%.
Moreover, we forecast the growth rate of gross capital formation to decline from 7.28% in 2024 to 3.76% in 2025. According to a recent BSP report, overall lending grew by only 11.2% in April 2025, slower than the February 2025 figure, 12.2%. Bank lending to manufacturers rose by a meager 0.6% in April versus 2.0% in March. The growth in loans for production-related activities also experienced a slight reduction, from 10.8% in March to 10.3% in April. Given these figures, we believe that the sluggish growth in private investment signals a waning private sector confidence due to a lethargic domestic consumer demand and pale external demand.