AMRO Maintains Philippines Growth Outlook, Cuts Inflation Forecast

MANILA, Philippines — The Association of Southeast Asian Nations Plus 3 (ASEAN+3) Macroeconomic Research Office (AMRO) has maintained its growth forecasts for the Philippines for this year and the next, even as it lowered its inflation outlook for the year. The July Update of AMRO’s ASEAN+3 Regional Economic Outlook report released yesterday showed that it kept its gross domestic product (GDP) forecasts for the Philippines at 4.1 percent for this year and 5.5 percent for next year, unchanged from projections provided last month. AMRO’s 2026 growth forecast is within the government’s revised 3.5 to 4.5 percent growth target for the year, but lower than the 4.4 percent full-year growth last year. Similarly, AMRO’s growth projection for next year falls within the government’s adjusted growth goal of five to six percent for 2027. Economic growth slowed to a five-year low of 2.8 percent in the first quarter. While the GDP growth forecasts were unchanged, AMRO cut its inflation forecast for the country to 5.7 percent this year from six percent, previously. Despite the reduced forecast, AMRO expects inflation in the Philippines to remain elevated compared to the 1.7 percent average inflation last year. Meanwhile, it maintained the inflation forecast for next year at 4.1 percent. Inflation eased to 6.4 percent in June from 6.8 percent in May. This brought average inflation in the first half to 4.8 percent, above the central bank’s two to four percent target band. While the Philippines was hit harder by the oil shock than other countries through the faster increase in prices, AMRO chief economist Dong He said that the central bank has acted quickly and helped contain broader pressures through monetary policy tightening. “And because (of) oil prices now, we’re assuming the baseline at a lower level so we would expect that overall inflation in 2026 for the Philippines would be slightly lower than we thought would be the case back in June,” he said. In terms of the growth outlook, he said that the country is expected to continue to benefit from the artificial intelligence (AI) boom. “Even though we typically think that the Philippines is very much a service-based export economy, it is very much plugged into the global AI cycle as well. You know they are very involved in semiconductor exports. So that would continue to provide support to the export growth in the Philippines,” he said. He also said that the new 12.5 percent tariff imposed by the United States on goods coming from the Philippines and other trading partners after the 10 percent global tariff expired last week, is unlikely to have a significant effect. “I think the region really has adjusted very well to the uncertainties imposed by the US tariffs in the past more than one year since the reciprocal tariffs started in April 2025. The private sectors have adjusted or reconfigured their supply chains. So I think the region has dealt with tariff-related uncertainties quite well,” he said. “We don’t see any further change in our view on that,” he added. However, he flagged risks from the El Niño phenomenon and its impact on food prices in the region. “Food prices take up a significant share in the CPI (consumer price index) basket…So I think this is an area we have to be very vigilant about,” he said. Allen Ng, regional surveillance group head and lead economist at AMRO said that the evolving Middle East conflict and the durability of the AI cycle are the two most salient risks to the region’s growth. He also cited financial market volatility and further protectionist measures as risks that need to be watched closely by policymakers in the region.