Metrobank expects a gradual economic recovery in 2026 after a challenging year marked by global and local headwinds.
Last year began with concerns over US policy changes and their impact on the global economy. While the Philippines was initially seen as relatively protected, conditions weakened as the year went on. A US government shutdown hurt the American economy, and global uncertainty increased.
However, the outlook has
improved as US President Donald Trump softened his tariff stance and the US Federal Reserve moved closer to cutting interest rates. This could lead to better economic conditions in the US and a stronger dollar in 2026.
In the Philippines, weak domestic growth added to global pressures. The peso fell to historically low levels in the second half of the year as uncertainties outweighed typical seasonal support.
Looking ahead, Metrobank expects 2026 to be better, with both global and local economies showing signs of recovery.
After a mild recession in 2025, the US economy is seen rebounding in 2026, though growth is expected to remain moderate due to soft demand and a cooling labor market. Inflation is likely to stay above the Federal Reserve’s target, but concerns over jobs and consumer sentiment may lead the Fed to continue cutting rates.
Metrobank forecasts that the Fed will reduce interest rates by a total of 100 basis points in 2026, bringing the federal funds rate to around 2.5 percent to 2.75 percent by year-end.
For the Philippines, Metrobank expects the Bangko Sentral ng Pilipinas (BSP) to continue easing policy next year, cutting rates by a total of 50 basis points. This would bring the key policy rate to about 4 percent by end-2026 and widen the interest rate gap with the US.
