Despite frequent weather disturbances, recurring typhoons, and persistent corruption issues in flood control, the Philippines is still expected to emerge as one of the fastest-growing emerging market (EM) economies in 2026, according to the think tank Oxford Economics.

In an Oct. 2 report, Oxford Economics senior economist Callee Davis said the Philippines is expected to achieve 5.7-percent gross domestic product (GDP) growth next year. However, the think tank’s forecast is below the government’s six- to seven-percent target for 2026.

“In the Philippines, moderate inflation, accommodative monetary policy, resilient remittances, and large public spending programs underpin growth,” the report said.

The think tank highlighted that the Philippines, India, Saudi Arabia, the United Arab Emirates (UAE), and Vietnam—all located in Asia—would be the fastest-growing EMs next year.

The think tank expects the Philippines, India, Indonesia, and Thailand could see an additional 25- to 75-basis-point (bp) interest rate cuts, completing their easing cycle by early 2026.

By 2026, the think tank observed that employment, labor supply, and real wages in the Philippines are expected to reflect moderate wage pressures, supported by relatively balanced labor markets.

“Most EMs are expected to experience strong real disposable income growth, corresponding with positive consumption growth next year,” Oxford Economics said.

“Emerging Asia and the Middle East and Africa stand out as the strongest regions for consumption growth in 2026,” it added.

The think tank also noted that the Philippines is expected to see declining disposable income yet rising consumption next year.

According to Oxford Economics, net remittances growth is expected to remain steady across EMs next year, including the Philippines, where remittances represent around 10 percent of private consumption.

“Remittance inflows matter the most for economies where they account for a large share of private consumption,” the think tank added.

However, Oxford Economics highlighted that economies that rely heavily on remittances from the United States (US)—especially the Philippines, India, and Mexico—could face a downside risk to private consumption due to the one-percent excise tax on certain outbound remittances from the US starting January next year.

“Migrants may turn to cryptocurrencies or informal transfer channels to avoid the tax,” it added.

Moreover, the think tank noted that household consumption is expected to be the primary driver of the Philippines’ growth in 2026, followed by investment, while government spending, stock accumulation, and net exports are also expected to provide modest positive contributions.

“Investment is the second-largest growth driver for most EMs in 2026,” the report said.

The think tank also highlighted that growth in the Philippines as well as Vietnam is expected to shift from being export-driven to being fueled by domestic factors, supported by government infrastructure spending and increased industrial activity.

It also noted that the Philippines is projected to have a government primary balance of around -2 percent in both 2025 and 2026, reversing the pre-pandemic average in low positive territory.

Oxford Economics’ forecast aligns with the Manila-based Asian Development Bank (ADB), which earlier projected the Philippines’ 2026 GDP growth at 5.7 percent, slightly lower than its previous forecast of 5.8 percent.

According to the ADB, strong household and business demand, coupled with easing inflation, is expected to drive Philippine economic growth in 2026.

(Ricardo M. Austria)