Philippines growth seen slowing to 3.4% this year on weaker demand
The Philippine economy will expand 3.4% in 2026, down from 4.4% in 2025, before rebounding to 4.8% in 2027, according to the ASEAN+3 Macroeconomic Research Office.
Source: ASEAN+3 Macroeconomic Research Office · August 27, 2026 at 9:01 AM · AI-assisted report
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KUALA LUMPUR, MANILA, PHILIPPINES, ASEAN+3, 27 AUGUST 2026 —
The Philippine economy will expand 3.4% in 2026, down from 4.4% in 2025, before rebounding to 4.8% in 2027, according to the ASEAN+3 Macroeconomic Research Office.
Market Impact
Inflation is forecast to rise to 5.4% this year from 1.7% in 2025, driven by higher global oil prices and second-round effects on food and services. The current account deficit is projected to widen as energy import bills climb. The peso has weakened further amid external pressures, though external buffers remain adequate.
Monetary policy has been tightened to contain inflation. Bank Negara Malaysia noted last month that regional central banks are watching imported inflation from the Middle East conflict. The Philippine banking sector remains sound, but asset quality pressures are evident in selected sectors.
The fiscal deficit is expected to narrow this year as capital spending contracts. However, the pace of medium-term fiscal consolidation has slowed to address external challenges. Public investment has been subdued, weighing on domestic demand over the past year.
Rapid advances in artificial intelligence are reshaping the global economy, bringing both competitive pressures and new opportunities for the Philippines’ semiconductor and IT-BPM sectors. To capture these opportunities, the country should expand its semiconductor industry into higher-value activities and transition the IT-BPM sector toward more knowledge-intensive services, AMRO said.
Structural reforms are needed to strengthen medium-term growth. Infrastructure priorities include diversifying the energy mix, improving climate resilience, and institutionalising flood-control governance. Digital infrastructure and workforce upskilling are critical to adapting to AI-driven changes.
AMRO’s annual consultation visit to the Philippines ran from August 7 to 27, 2026. The mission was led by Group Head and Lead Economist Jinho Choi, with AMRO Director/CEO Yasuto Watanabe and Chief Economist Dong He participating in policy meetings. The team thanked Philippine authorities for their cooperation.