The Asean+3 Macroeconomic Research Office (AMRO) has cut its 2026 growth forecast for the Philippines to 3.3 percent from 4.1 percent. The regional surveillance group said in its Regional Economic Outlook Update, released on Monday, that the country’s prospects for the rest of the year depend largely on how fast government spending recovers.
The new figure sits below the Marcos administration’s target range of 3.5 to 4.5 percent. Leaving aside the 2020 pandemic contraction, it would be the slowest growth since 2009, when the economy expanded 1.4 percent after the global financial crisis. The Philippines would also trail AMRO’s 4.9 percent forecast for the Association of Southeast Asian Nations (ASEAN) as a whole. Vietnam is projected to grow 8 percent, Indonesia 5.3 percent, and Malaysia 5.1 percent, while Thailand is expected to lag at 2.4 percent. For 2027, AMRO lowered its Philippine estimate to 4.6 percent from 5.5 percent, short of the government’s 5 to 6 percent goal.
AMRO chief economist Dong He told reporters that an oil shock tied to the war, together with weak state spending after a broad anti-corruption crackdown, continues to drag on output. He pointed to the flood control controversy as a major reason public investment slowed. The economy grew just 2.6 percent in the first half of the year. “Without putting inflation under control, growth will be affected in any case,” He said.
On prices, AMRO trimmed its 2026 inflation forecast for the Philippines to 5.6 percent from 5.7 percent, still well above the central bank’s 3 percent target. It raised its 2027 estimate to 4.6 percent from 4.1 percent. The Bangko Sentral ng Pilipinas has raised its benchmark rate by a quarter point three times since April, to 5 percent. Governor Eli Remolona Jr. described the August increase as a preemptive step against a severe El Niño and possible wage hikes, and said the country’s fundamentals look intact over the medium term.
AMRO also flagged the country’s exposure to swings in global financial conditions, mainly through foreign portfolio flows. Local bond yields have moved higher because of the Philippines’ heavy dependence on imported energy, rising inflation risks, and expectations of tighter monetary policy. The group warned that delays in infrastructure projects and a wider current account deficit could hurt corporate earnings and investor confidence.
