The Philippine economy is entering 2026 on uneven footing, with growth expected to slow slightly and risks looming large, economist Jonathan Ravelas said on Wednesday.
Ravelas, who is also director of eManagement for Business and Marketing Services, told the Pandesal Forum that he projected gross domestic product to expand between 3.8 and 4 percent this year year, down from 4.4 percent in 2025, signaling stabilizing momentum tempered by lingering vulnerabilities across sectors.
Ravelas painted a cautiously optimistic picture but emphasized that the outlook is highly conditional.
Monetary policy is expected to maintain a tightening bias as the Bangko Sentral ng Pilipinas (BSP) keeps inflation containment at the forefront. The peso could stabilize in the low P60 level against the US dollar if the Federal Reserve eases, though persistent current account deficits remain a key concern.
Consumer behavior is gradually shifting from “survival mode” toward cautious recovery, supporting value-driven spending and the slow normalization of demand.
“Under a base case, 2026 becomes a year of real income recovery, value-oriented spending, and accelerated digital adoption across sectors,” Ravelas said.
Yet, the path ahead is far from certain. Delays in capital expenditures, climate shocks, geopolitical tensions, and domestic political noise could unsettle investor sentiment. Oil prices, he noted, are a pivotal factor.
Short-term spikes above USD90 to USD100 per barrel could reignite inflation, force the BSP to pause easing, and weaken the peso, requiring fiscal support. Prolonged prices above USD120 could destabilize markets further, while even brief geopolitical de-escalation could normalize oil, ease inflation pressures, and allow policy loosening, stabilizing currency and equities.
Ravelas’ analysis underscores a central theme for policymakers and investors: while recovery signs are emerging, the Philippine economy’s trajectory remains fragile, contingent on both global shocks and domestic policy choices.
