Manila: The Philippines continues to benefit from resilient exports and stable remittance inflows, but reforms should be implemented to contain inflation and boost economic growth, ASEAN+3 Macroeconomic Research Office (AMRO) said.
According to Philippines News Agency, AMRO chief economist Dong He emphasized the importance of resilient exports and remittance inflows as strengths of the Philippine economy. He made these remarks during a briefing following AMRO's Annual Consultation Visit to the Philippines. The mission, led by Group Head and Lead Economist Jinho Choi, included policy meetings with Philippine authorities, with participation from AMRO Director/Chief Executive Officer Yasuto Watanabe.
He projected that the country's exports are expected to grow by approximately 10 percent this year. Despite global economic shocks, He noted that the Philippines could still benefit from robust remittance flows, which would support private consumption. However, AMRO cautioned that the overall growth of the Philippine economy is expected to slow, with economic growth projected at 3.4 percent this year, down from 4.4 percent in 2025.
For the year 2027, AMRO expects the economy to grow by 4.8 percent, lower than their previous forecasts of 4.1 percent for 2026 and 5.5 percent for 2027. Choi attributed this year's slowed growth to weakened private consumption amid higher inflation and a sharp contraction in public investment, although he anticipates a gradual recovery in public construction later in the year.
Inflation is projected to settle at 5.4 percent this year, a slight decrease from AMRO's earlier 5.7 percent forecast. The inflation forecast for 2027 was also revised downward to 3.8 percent from 4.1 percent. AMRO cites the increase in global oil prices and second-round effects on non-energy items, such as food and services, as reasons for the sustained inflation levels.
Choi stressed the need for a timely and balanced policy response to prevent the adverse effects of external and domestic challenges from becoming persistent. He suggested that fiscal policy should remain responsive to cyclical downturns by restoring well-governed infrastructure projects while maintaining a firm commitment to medium-term fiscal consolidation.
In terms of monetary policy, Choi advised that the Bangko Sentral ng Pilipinas (BSP) should remain data-dependent in its decision-making. Further rate hikes would be necessary if core inflation remains elevated and persistent or if inflation expectations show signs of becoming unanchored. Structural reforms are also deemed necessary to help the economy adapt to technological changes and strengthen its medium-term growth potential.
Choi highlighted the need for the country's semiconductor industry to expand into higher-value-added activities and for the information technology and business process management sector to transition to more knowledge-intensive and AI-complementary services. Infrastructure priorities should include strengthening energy security through a diversified energy mix and ensuring climate resilience initiatives are guided by measurable outcomes.
