The Philippines is poised for slower economic growth and higher inflation over the next two years as escalating geopolitical tensions in the Middle East drive up energy and commodity costs, prompting the ASEAN+3 Macroeconomic Research Office (AMRO) to downgrade its economic outlook for the country.
In its latest interim forecast, AMRO trimmed its Philippine gross domestic product (GDP) growth projection to 4.1 percent in 2026 and 5.5 percent in 2027, down from its earlier forecasts of 4.4 percent and 5.8 percent, respectively.
The revisions reflect concerns that rising prices could erode consumer spending and weaken domestic demand.
At the same time, AMRO sharply raised its inflation forecast for 2026 to 6 percent from 3.9 percent previously. Inflation is expected to moderate to 4.1 percent in 2027 but remain above the earlier estimate of 3.6 percent. Consumer prices rose by an average of just 1.7 percent in 2025.
The downgrade underscores the Philippines’ vulnerability as a net energy importer. Higher oil prices are expected to feed through transport, logistics, and food costs, squeezing household purchasing power and potentially slowing economic activity.
AMRO noted that while some economies in the ASEAN+3 bloc are benefiting from the artificial intelligence-driven technology boom, countries such as the Philippines and Vietnam face stronger inflation pass-through effects that could dampen growth prospects.
Although AMRO kept its overall ASEAN+3 growth forecast at 4 percent for 2026, it raised the region’s inflation outlook to 1.8 percent from 1.4 percent, citing persistent disruptions linked to the Middle East conflict.
The regional surveillance body warned that a prolonged conflict and further increases in oil prices could pose greater challenges for growth and price stability, particularly for energy-dependent economies such as the Philippines, where inflation pressures could complicate both monetary policy and consumer recovery.
