The Bangko Sentral ng Pilipinas (BSP) has room to end its ongoing monetary policy easing cycle with another interest rate reduction before yearend, according to think tank Capital Economics.

“We think there’s scope for at least one more [BSP rate] cut this year,” Capital Economics senior Asia economist Gareth Leather and deputy chief emerging markets (EMs) economist Jason Tuvey said in a Feb. 26 report.

The think tank noted that the latest 25-basis-point (bp) rate cut last Feb. 19, which lowered the policy rate to the current 4.25 percent, was the BSP’s response to weak economic growth amid low inflation.

Capital Economics expects Philippine gross domestic product (GDP) growth to remain sluggish, with a projected recovery to just 4.5 percent this year from the post-pandemic low of 4.4 percent last year.

The think tank acknowledged that its 2026 GDP growth forecast for the Philippines is well below the consensus, but it pointed out that the billion-peso flood-control infrastructure corruption scandal “is continuing to weigh on economic activity.”

But for Capital Economics, “the worst may now be over for the Philippines, with the PMIs [purchasing managers’ indices] rebounding in recent months, helped by the government restarting some projects.”

It also helps that “export growth from the Philippines has picked up on the back of stronger shipments of electronics products,” the think tank added.

Philippine goods exports reached a record high in 2025, while outbound shipments sustained growth, although at a slower pace, in January, the government reported on Friday, Feb. 27.

Manila Bulletin earlier reported that Capital Economics had forecast the Philippines to become the world’s 19th-largest economy by 2050, although “entrenched corruption and political instability could also weigh on growth prospects.”

In its Long-Run Economic Outlook 2026 report released last Feb. 18, Capital Economics projected the Philippines will rise from 30th place in nominal GDP terms in 2025 to join the world’s 20 largest economies 25 years from now.

The Philippines’ nominal GDP is estimated by the think tank to grow by an average of 5.1 percent annually from 2031, reaching $3.51 trillion in 2050.

But fast-rising Vietnam is set to overtake the Philippines, climbing from 31st place last year to 14th in 2050, with nominal GDP estimated to hit $4.6 trillion.

In terms of nominal GDP per capita, Vietnam would also surpass its two Southeast Asian neighbors in 2050, projected at $41,959, higher than the Philippines’ $24,265 and Indonesia’s $28,128—making the Vietnamese richer than Filipinos and Indonesians by that time.

After growing by an average of 6.4 percent before the Covid-19 pandemic from 2010 to 2019 and a subpar 3.3 percent from 2020 to 2025, Capital Economics forecasts the economy to grow by an average of six percent annually from 2026 to 2030, easing to 5.5 percent from 2031 to 2040, and moderating further to 4.7 percent from 2041 to 2050.

The think tank’s growth forecasts for 2026 to 2027, if realized, would fall within the government’s downscaled targets of five to six percent for this year and 5.5 to 6.5 percent for next year.