De La Salle University (DLSU) economists have lowered their 2026 economic growth forecast anew, warning that mounting global and domestic shocks could leave the Philippine economy posting its slowest post-pandemic expansion this year.

In their latest report on the Philippine economy for June 2026 published on Monday, June 15, DLSU economists Jesus Felipe, Mariel Monica Sauler, Gerome Vedeja, and Seth Paolo Paden cut their gross domestic product (GDP) growth projection for 2026 to 3.08 percent from 3.11 percent previously.

The revised forecast is well below the government’s downgraded 2026 GDP growth target of five to six percent and lower than the 4.4-percent expansion last year in the aftermath of the flood-control infrastructure corruption scandal.

“With half of 2026 behind us, our view of the Philippine economy is clear. The latest indicators reinforce the assessment that we have a fragile economy,” the economists said.

“It is true that the energy shock is important but, at the same time, we lack levers to maneuver. If anything, we have become more pessimistic and, consequently, our revision is downward,” they added.

The DLSU economists warned that first-quarter GDP growth of 2.8 percent, initially viewed as a possible low point, now appears to be “the beginning of a downward trend.” They expect growth to slow further to 2.5 percent in the second quarter and reach a trough of 2.2 percent in the third quarter before recovering to 4.81 percent in the fourth quarter of 2026.

According to the report, the weaker outlook reflects the continued impact of the global energy price and supply shocks, the Bangko Sentral ng Pilipinas’ (BSP) tightening cycle, as well as mounting risks to food production from rising fertilizer costs and the threat of El Niño.

The economists identified the Middle East conflict and the closure of the Strait of Hormuz as the single largest negative shock facing the economy, noting that diesel prices had risen by more than 172 percent and gasoline prices by 72.6 percent as the Philippines remains heavily dependent on imported fuel.

They also noted that, as they published the report on June 15, the United States (US) and Iran had reportedly reached an agreement to end the war that began last Feb. 28. The report cited that the agreement was expected to be signed on June 19, with the Strait of Hormuz reopening immediately and negotiations on issues such as sanctions on Iran and its nuclear program continuing over the succeeding 60 days.

Despite that development, DLSU economists maintained that global uncertainty and domestic political turmoil, including recent changes in Senate leadership, would continue to weigh on growth prospects.

Private consumption, which accounts for the bulk of economic activity, is projected to expand by only 2.82 percent this year, which the economists said would be the weakest pace in the post-pandemic period as households continue to grapple with elevated inflation and weaker purchasing power.

Government spending, meanwhile, is forecast to increase by 5.26 percent in 2026.

Investment activity remains a major concern. Gross fixed capital formation is projected to contract by 1.74 percent this year, marking the first annual decline since the Covid-19 pandemic.

On the external front, exports are expected to grow by 4.81 percent in 2026, supported by the global artificial intelligence (AI)-driven semiconductor cycle. Imports, meanwhile, are forecast to rise by only 1.78 percent as businesses and households curb spending amid higher costs.

By sector, agriculture, forestry, and fishing are projected to grow by just 0.27 percent this year. Industry is forecast to expand by 2.24 percent, while services—the economy’s largest sector—is expected to grow by 3.88 percent.

DLSU economists expect headline inflation to average 4.9 percent in 2026—above the BSP’s two- to four-percent target range of manageable annual price increases—after easing to 6.8 percent in May from the more than three-year high of 7.2 percent last April.

Looking beyond 2026, the economists forecast GDP growth of 3.4 percent in 2027 and 3.6 percent in 2028.

“Both 2027 and 2028 remain well below the government’s targets (of 5.5 to 6.5 percent for 2027, and six to seven percent for 2028), confirming that the damage from the compound shocks of 2026 will linger in the coming years,” they said.