Canada-based Manulife Investment Management expects the Philippine economy to gain momentum in the second half of 2026, driven by an acceleration in public spending and a tightening labor market.

In a briefing on Wednesday, Jan. 21, Murray Collis, Manulife chief investment officer for Asia fixed income, said the combination of steady remittances from overseas Filipinos and ongoing capital investments will underpin the rebound.

“Our team expects economic growth to improve in the second half of 2026, supported by increased government spending, a more robust labor market, steady remittances, and ongoing investment in the economy,” Collis told reporters.

The Toronto-based asset manager joins a growing chorus of institutions predicting a recovery for the Philippines following a period of sluggish domestic demand and fiscal constraints.

The upbeat outlook also aligns with the Bangko Sentral ng Pilipinas (BSP), which has signaled that investor confidence is likely to return to pre-slump levels by the latter half of the year.

The government is seeking to reverse the trajectory of 2025, when gross domestic product (GDP) growth slowed to 4.6 percent.

For 2026, the central bank projects a recovery to 5.4 percent, placing it within the government’s revised target range of five percent to six percent.

While the BSP has noted it lacks the mandate to directly address structural issues such as infrastructure-related corruption, its aggressive monetary easing has been designed to counter a fiscal squeeze that previously dampened private sector activity.

Collis suggested that the central bank is nearing the end of the easing cycle that commenced in August 2024.

The benchmark interest rate has already been reduced by 200 basis points to 4.5 percent. According to Manulife, the room for further accommodation is narrowing as Collis noted that additional cuts are likely only if growth fails to hold the five percent floor.

“We see that further cuts are really only likely if growth falls below five percent,” he said.

Earlier, BSP Governor Eli M. Remolona Jr. said that while a 25-basis-point cut remains on the table for this year, a more significant reduction would require a more pronounced economic slowdown.

The central bank is expected to pivot its focus toward currency stability and inflation management as the economy heals.

Collis observed that Philippine bond yields are seeing slight upward pressure in anticipation of the recovery. Manulife’s base case suggests that local yields will remain closely correlated with regional peers, reflecting a broader trend of moderate increases observed in recent months.

“We expect the Philippines to remain closely correlated with other regional markets. Our base case for yields anticipates moderate upward pressure in the short term, which aligns with trends we’ve observed over recent months,” said Collis.

However, the outlook remains clouded by external volatility. asCollis warned that the primary risks to the Philippine bond market stem from global trade tensions, specifically potential United States (US) tariff policies that could stifle global commerce.

Domestically, weather-related disruptions continue to pose a threat to the country’s agricultural output and inflation targets.