Unicapital Securities, Inc. has launched its 2025 Mid-Year Briefing series, “Turning the Corner,” outlining how the Philippine economy is moving past early headwinds and toward a more stable second half of the year. With inflation cooling, markets strengthening, and trade dynamics shifting, the outlook suggests both optimism and caution.
Here are the seven most important takeaways:
1. Inflation hits its lowest first-half average in over a decade
Inflation settled at just 1.8% in the first six months of 2025, far below expectations and the lowest first-half average in more than ten years. Lower rice and oil prices drove the decline, giving households relief from high costs and fueling consumer optimism.
2. Interest rates may see further cuts
With inflation under control, the Bangko Sentral ng Pilipinas (BSP) has more room to adjust policy rates. After a 50-basis-point cut earlier this year, economists are eyeing another 25 to 50 basis points of easing. This would create a more supportive environment for both businesses seeking capital and consumers taking loans.
3. Philippine GDP growth remains regionally competitive
While GDP growth expectations were revised to 5.5% for 2025, this figure is still ahead of Southeast Asia’s projected average of 4.2%. The economy continues to draw strength from household consumption, major infrastructure programs, recovering tourism, and stable remittance inflows from overseas Filipinos.
4. Stock market rebounds with stronger momentum
The Philippine Stock Exchange Index (PSEi) bounced back to 6,350 in July after falling 3% earlier in the year. Unicapital forecasts the index could rise to 7,100 before year-end, boosted by steady corporate earnings and attractive share valuations.
5. Corporate earnings outlook signals opportunity
Listed firms are expected to post an 8% earnings growth in 2025, with sectors like Consumer, REITs, and Utilities showing resilience. Unicapital emphasized that the PSEi rebound reflects more than a technical correction — it indicates underlying strength that investors can capitalize on.
6. Trade challenges emerge under new U.S. tariffs
While semiconductors — the country’s largest export — were spared from tariff hikes, most other Philippine exports now face a 19% U.S. tax under President Donald Trump’s new policy. This rate is higher than those imposed on neighbors such as Vietnam and Thailand, potentially making Philippine goods less competitive in the U.S. market.
7. Export diversification offers a long-term path
Despite tariff challenges, Unicapital sees opportunities for the Philippines to climb the global value chain by expanding higher-value exports. With semiconductors still in a strong position, the country has the potential to diversify and secure a more strategic role in international trade.
Unicapital’s 2025 mid-year outlook highlights a Philippines at a turning point: inflation is easing, monetary policy is supportive, and markets are regaining momentum. Yet, global trade headwinds remain a challenge. The key will be sustaining stability and translating it into long-term growth that benefits investors, businesses, and Filipino households alike.
