AMRO downgrades Philippine growth outlook
Published Jan 21, 2026 02:42 pm
Singapore-based regional surveillance organization ASEAN+3 Macroeconomic Research Office (AMRO) has revised downward its growth projections for the Philippines for 2025 and 2026, following the worse-than-expected slowdown to four percent—the lowest in 4.5 years—in the third quarter of last year.
According to AMRO’s quarterly update of its flagship ASEAN+3 Regional Economic Outlook (AREO) released on Wednesday, Jan. 21, the Philippine economy is now expected to expand at a slower pace of 5.2 percent in 2025 and 5.3 percent in 2026, down from its October 2025 forecasts of 5.6 percent and 5.5 percent, respectively.
“The reason for this downward revision was a fairly weak third quarter of 2025 outturn,” AMRO chief economist Dong He said during an online briefing.
“The picture for the Philippines’ economy is that it has been quite steady, but there are some headwinds on the investment side. Private consumption has been quite firm, and we’ll continue to believe that private consumption will remain firm,” He added.
As for inflation, AMRO maintained its 2026 forecast at 3.2 percent, unchanged from its October estimate.
He stressed that private investment hinges on strong investor confidence, noting that public investment has also been affected by controversies, including issues surrounding corruption in flood control projects.
“When we think about the Philippines’ economy, it has been growing steadily,” He said, while cautioning that growth has yet to return to the faster pace seen before the Covid-19 pandemic.
To sustain economic resilience and return to a higher growth trajectory, He emphasized that policies should focus on strengthening resilience, particularly against climate-related risks and natural disasters.
“The Philippine economy is vulnerable to climate-related risks,” He said, adding that strengthening infrastructure to make the economy more resilient to natural disasters should be a key priority.
He also highlighted the growing importance of artificial intelligence (AI), noting that while the Philippines has performed strongly in information technology-business process management (IT-BPM) and related service exports, the challenge in the AI era lies in upgrading these capabilities to reduce the risk of jobs being displaced by AI-driven automation.
“That calls for more investment in upgrading human capacity, human capital to be more skilled, and upgrading to be suitable for the AI age,” He said, adding that such efforts would require strong public-private partnerships (PPPs), supported by robust policy frameworks, prioritized spending plans, and targeted projects to enhance the economy’s productive capacity.
He said these measures would help support both public and private investment.
In the short term, monetary and fiscal policies remain the primary tools available to the government, with both the central bank and fiscal authorities having the capacity to support the economy.
“We have a lot of confidence that the government and the authorities do have the policy room to support,” He added.
“Going beyond the short term, and the longer term… what’s important is really to strengthen governance, strengthen investor confidence, and prioritize investments or prioritize public spending so the economy will become more resilient,” He said, adding that these longer-term issues would require a concerted effort to strengthen the investment environment.
He concluded, “I think the message is really clear. In the short term, we believe the authorities have policy room to support the economy, but the challenges are really important from a longer-term point of view to strengthen the business of the economy.”
If AMRO’s 2026 growth projection is realized, Philippine economy would fall within the government’s downgraded target of five to six percent for the year.
Earlier this month, National Socioeconomic Planner Arsenio M. Balisacan, the country’s chief economist, announced that the Cabinet-level, interagency Development Budget Coordination Committee (DBCC) had revised the country’s GDP growth targets for the next two years downward, projecting 5.5 to 6.5 percent for 2027, while maintaining six to seven percent—the earlier goal for the next three years—for 2028.
Meanwhile, the projected 5.2-percent expansion for 2025 falls below the government’s target range of 5.5 to 6.5 percent.
Balisacan already conceded last year that even the lower end of the 2025 growth target is out of reach, noting that achieving at least five percent for the full year would still make the Philippines one of the fastest-growing economies in Asia.
GDP performance during the fourth quarter and full-year 2025 will be reported on Jan. 29.