Following the 4.5-year low gross domestic product (GDP) expansion in the third quarter of 2025, Singapore-based Oversea-Chinese Banking Corp. Ltd. (OCBC) has sharply lowered its Philippine growth forecast for the year to below five percent.

OCBC Global Markets Research and Strategy said in a Nov. 10 commentary that it has adjusted downward its growth projection for the entire year. Previously projecting GDP to expand by 5.5 percent, OCBC now believes this year’s growth will reach only 4.8 percent—far below 5.5 percent, the lower bound of the government’s already downgraded target range reaching up to 6.5 percent.

“Domestic demand [is] still punching below its weight due to the ongoing government anti-corruption drive, which could slow economic growth until 2026,” OCBC said. Other than the investigation conducted by Congress, the Anti-Money Laundering Council (AMLC) has also launched a separate probe into potential dirty money flows.

For 2026, the Singaporean bank projected the Philippine economy to grow by 5.5 percent, below the government’s also downscaled goal of six to seven percent.

OCBC noted that its subpar GDP growth forecast for next year suggests that the output gap, or the difference between the country’s potential growth and actual growth, will remain in negative territory.

Growth steeply slowed to four percent in the third quarter from 5.5 percent in the second quarter, dragged down by weaker domestic demand. Ongoing flood control corruption scandals received most of the blame for the moderation in household spending, investment, and government expenditure.

Imports expanded by 2.6 percent, slower than the 3.5-percent growth in the previous quarter. OCBC said this reflects weaker domestic demand. Meanwhile, exports climbed to seven percent from 4.7 percent, boosted by front-loaded electronics shipments.

Prior to the release of GDP data, the Bangko Sentral ng Pilipinas (BSP) had said this year’s growth may fall short of the full-year target of 5.5 to 6.5 percent, which was then followed by the central bank’s downward adjustment of its 2026 growth forecast to 5.3 percent from 5.6 percent previously, citing corruption concerns.

National Socioeconomic Planner Arsenio M. Balisacan last week conceded that hitting even the lower bound of the target would be challenging, as the year-to-date average stands at just five percent.

Against this context, OCBC has maintained its forecast that the BSP’s policy-setting Monetary Board (MB) will proceed with trimming its monetary policy rate by a quarter of a point in December, bringing the current 4.75-percent rate to 4.5 percent before the year closes.

On the upside, OCBC expects consumer goods prices to rise moderately for the remaining two months of the year. It expects inflation to average 1.6 percent this year, before accelerating to 2.5 percent in 2026, still within the government’s target band of two to four percent.