Philippines growth outlook weakens through 2027 as economists cut GDP forecasts

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Philippines GDP forecast cut

Highlights

Maybank has downgraded its Philippine GDP growth forecasts to 2.4% for 2026 and 3.2% for 2027, citing weaker investment and fiscal constraints.
The third-quarter GDP growth slowed to 2.1%, the weakest since 2021, with January-September growth at 2.5%, well below government targets.
Oxford Economics projects a record-strength El Niño could push Philippine GDP 2.6% below baseline by 2030, prolonging weak consumption due to productivity losses.

Forecast cuts highlight persistent economic strain

As reported by BusinessWorld, citing Maybank Research Pte. Ltd., the bank has cut its full-year Philippine GDP growth forecast to 2.4% in 2026 from 2.7% previously, and to 3.2% in 2027 from 4% previously.

If realized, both projections would miss the government’s 3.5%-4.5% growth target this year and the 5%-6% goal next year. Maybank says weaker foreign investor momentum, rising public debt and wider fiscal deficits are adding to pressure on the economy.

The bank also says higher oil prices linked to the Middle East conflict and peso depreciation are likely to keep inflation elevated and reduce household purchasing power. Delays in public infrastructure implementation could further restrain activity, while the broader recovery remains gradual because of weak household spending, subdued investment and limited fiscal flexibility.

Against this backdrop, Maybank has lowered its private consumption growth forecast to 3% this year from 3.2% and to 3.4% in 2027 from 4.1%. It also expects gross fixed capital formation to shrink by 6.8% this year, compared with its earlier forecast of a 6.6% decline, before growing by 1.7% in 2027, slower than the previous 2.1% projection.

Third-quarter slowdown deepens downside risks

The weaker outlook follows third-quarter GDP growth of 2.1%, down from 4% a year earlier and a revised 2.4% in the second quarter. That marks the slowest expansion since the 3.8% contraction in the first quarter of 2021 during the coronavirus pandemic, and, excluding the pandemic years, the weakest reading in more than 16 years.

GDP growth for the first nine months stands at 2.5%, well below the government’s full-year target. Economy Secretary Arsenio M. Balisacan says the Philippines would need fourth-quarter growth of 6.3% to reach the lower end of the official target range, although he also says growth of 4% to 4.5% would be enough to bring the full-year result to at least 3%.

Other economists also see downside risks building. HSBC Global Investment Research Senior ASEAN Economist Aris D. Dacanay says the weaker-than-expected third-quarter result creates a sizeable downside risk to the bank’s forecasts, with baseline growth seen averaging 3.2% in 2026 and 4.8% in 2027.

Oxford Economics Assistant Economist Jun Hao Ng says growth is also likely to fall short of official goals, with the firm projecting 3% this year and 4.5% next year. He says slow public infrastructure spending, inflation pressures extending into 2027 and labor market weakness are likely to keep consumer sentiment subdued, while political infighting could still weigh on business and investor confidence.

Oxford Economics also warns that climate risks could add to the long-term drag. In a separate report, the firm says a record-strength El Niño could leave Philippine GDP 2.6% below its baseline level by late 2030, with food-price pressures easing by then but consumption remaining weak as productivity losses weigh on incomes.

As highlighted earlier, Philippine bond reforms aimed at broadening the investor base, while noting wider constraints on business investment.

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