Growth forecast slides low, then lower

Various economic forecasters have been issuing lower growth numbers of the Philippine economy.  The latest downgrade came from the  Asean+3 Macroeconomic Research Office (Amro) which cut its outlook for the country for 2026 and 2027.

Amro on Thursday lowered its growth forecast for the Philippines to 3.4 percent in 2026 from 4.1 percent previously, and to 4.8 percent in 2027 from 5.5 percent.

Both forecasts would fall short of the Development Budget Coordination Committee’s (DBCC) recalibrated growth targets of 3.5 percent to 4.5 percent for 2026 and 5 percent to 6 percent for 2027.

The DBCC has yet to hit any of its annual growth targets since the start of the Marcos administration.

Amro Mission Chief Jinho Choi said the Philippines is facing two shocks: an external, supply-driven shock and a domestic demand shock. These have contributed to the economy’s slowdown for four consecutive quarters through the second quarter of 2026.

“This year’s growth will be mainly made by weaker private consumption amid higher inflation and sharp contraction in public investment,” Choi said at a media briefing.

Official data showed that GDP growth slowed for four consecutive quarters, from 3.9 percent in the third quarter of 2025 to 3 percent in the fourth quarter. Growth eased further to 2.8 percent in the first quarter of 2026 and 2.3 percent in the second quarter.

Choi said the economy could still draw support from a gradual recovery in public construction and strong exports, which is expected to grow by around 10 percent this year, in the second half.

Amro Chief Economist Dong He, meanwhile, said the recovery in public investment will be critical to strengthening domestic demand and supporting growth.

“Public construction has to accelerate in order for domestic demand to be stronger to even achieve the 3.4 percent forecast we have,” He said.

In the medium-term, He said the Philippines needs to build more resilient infrastructure, improve the affordability and reliability of electricity, and strengthen its capacity to withstand climate-related shocks to attract more foreign direct investment.

“All these would help the economy to start a path of higher median term growth,” He said.

He said, however, that it was too early to determine whether the Philippines could return to its targeted growth path by 2028, as this would depend on developments in 2026 and from 2027 onward.

Meanwhile, Amro also lowered its inflation forecasts for the Philippines to 5.4 percent in 2026 from 5.7 percent previously, and 3.8 percent in 2027 from 4.1 percent.

If realized, inflation would return to within the Bangko Sentral ng Pilipinas’s 2 percent to 4 percent target range by next year.

Choi said the revisions reflected recent developments in both headline and core inflation in July, as well as milder expectations for global oil prices.

Philippine headline inflation eased to 6.2 percent in July from 6.4 percent in June, while core inflation slipped to 4.2 percent from 4.4 percent.

Average headline inflation stood at 5 percent from January to July.