AMRO slashes growth outlook for Philippines in 2026

The Philippine economy may struggle to meet the Philippine's sharply downgraded 3.4-percent growth forecast for 2026, according to AMRO. The downgrade followed an annual consultation visit by AMRO, which lowered its 2026 growth forecast from the previous target of 4.1 percent to 3.4 percent. This projection relies heavily on a recovery in government infrastructure spending, as public investment has contracted sharply.

AMRO chief economist Dong He stated that public construction must accelerate in the second and third quarters to achieve this forecast. AMRO mission chief Jinho Choi also noted that the economy has been hit by an external supply shock and a domestic demand shock, causing GDP growth to decelerate for four consecutive quarters. Inflation is projected to average 5.4 percent this year, a decrease from the previous estimate of 5.7 percent, and is expected to ease to 3.8 percent in 2027.

This projection, however, remains above the Bangko Sentral ng Pilipinas (BSP)’s target range of 2 to 4 percent for both 2026 and 2027. AMRO expects further rate increases from the BSP if inflation remains persistent. The current account deficit is expected to widen to 3.9 percent of GDP this year, mainly due to higher energy import costs.

Despite the downgrade, AMRO still expects Philippine exports to grow by around 10 percent this year, driven by global demand for electronics and semiconductors.