DUMAGUETE CITY—Following the disappointing economic performance in the second half of 2025, which turned out “worse” than the Bangko Sentral ng Pilipinas (BSP) had assumed, its chief said the central bank is revisiting its rosier output growth assumptions for 2026.

“We’re looking to revise [the growth assumption]. I hope we don’t revise downward,” BSP Governor Eli M. Remolona Jr. told reporters on the sidelines of a media information session on Sunday, Feb. 1. He also described the latest print as “worse than expected.”

This comes against the backdrop of the country’s output, as measured by gross domestic product (GDP), sharply slowing to three percent in the third quarter of 2025, bringing full-year GDP growth to 4.4 percent—below the central bank’s earlier forecast of 4.6 percent.

There remains no updated figure for the BSP’s macroeconomic forecast as it continues to assess why it failed to anticipate a much weaker GDP outturn in the final quarter of 2025. The BSP had projected output growth of 3.8 percent.

Remolona earlier said he expects the Philippine economy to gradually recover from the bruises inflicted by the controversial flood control fiasco. For 2026, the BSP is projecting GDP growth of 5.4 percent, accelerating to around six to 6.2 percent in 2027.

He also maintained his expectation that growth would recover by the second half of 2026 on the back of returning business and investor confidence.

While the BSP continues to monitor GDP performance, Remolona clarified that monetary authorities will also assess the latest developments, including demand and supply conditions. As such, another reduction in the key borrowing cost remains a “maybe.”

A cumulative 200 basis points (bps) have so far been cut from the policy rate, bringing it to 4.5 percent.

Meanwhile, Germany-based Deutsche Bank said the likelihood of the BSP moving to further reduce the benchmark rate has increased. “We think that a February rate cut from the BSP is now almost certainly ‘on the table,’” it said in a Feb. 2 commentary.

“We also see a rising likelihood of another rate cut in the first half given the likely wider-than-expected negative output gap,” Deutsche Bank Research added. A negative output gap refers to the economy expanding below its potential, which, for the Philippines, is estimated at around six percent.

Meanwhile, FitchSolutions company BMI maintained its GDP growth forecast for 2026 at 5.2 percent despite the below-target outturn in both the fourth quarter and the full year of 2025. As also cited by the government, BMI reiterated the significant impact of the deepening probe into the flood control mess on the sharp deterioration in growth.

BMI said its outlook is more likely to worsen should infrastructure projects continue to face delays beyond the second half of 2026.

Notably, infrastructure spending plunged in November last year as the government curtailed fund releases for public works projects amid an intensifying crackdown on corruption in flood control programs.

Government spending on infrastructure and capital outlays fell 45.2 percent to ₱48 billion in November 2025 from ₱87.6 billion in 2024, as tighter fiscal controls took hold amid heightened scrutiny of the Department of Public Works and Highways (DPWH) over graft allegations.