The Philippine economy is projected to bounce back in the latter part of 2026, overcoming current headwinds from reduced public infrastructure spending and shaken investor sentiment linked to corruption issues, according to the nation's central bank chief.
Growth Forecasts and Current Economic Slowdown
During a media forum in Mandaluyong City on Tuesday, January 7, 2026, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona presented the official outlook. He stated that gross domestic product (GDP) growth for 2025 is estimated at approximately 4.5 percent. This figure falls short of the government's target range of 5.5 to 6.5 percent set by the Development Budget Coordination Committee.
The economy's deceleration was evident in the third quarter of 2025, where expansion slowed to four percent from 5.49 percent in the preceding quarter. This brought the overall growth for the first nine months of the year to five percent.
Path to Recovery and Systemic Reforms
Governor Remolona expressed optimism for the coming years, forecasting growth to pick up to 5.4 percent in 2026 and around 6.2 percent in 2027. He attributed this anticipated rebound to a likely restoration of investor confidence.
He emphasized that the government is treating the recent corruption crisis as a catalyst for change. "This is an opportunity, I think, to reform the system," Remolona told journalists. The focus is on three key areas: prosecution of involved parties, restitution, and implementing systemic reforms to prevent future issues.
Among the specific reforms highlighted were measures to simplify the tax system, which would reduce the frequency of reassessments by the Bureau of Internal Revenue. The goal is to maintain the national tax effort at a steady 15 percent of GDP.
Strong Banking Sector and Monetary Policy Stance
Remolona assured that the domestic banking system remains robust and sufficiently funded, continuing to provide crucial support for economic activity. On monetary policy, the BSP Governor indicated that the central bank is nearing the end of its interest rate easing cycle as inflation stays manageable, effectively ruling out any future rate hikes.
"We're very close to where we want to be in terms of the policy rates," he said. "For now, it's either we don't move or we cut." Remolona noted that one additional policy rate reduction remains possible within the year, contingent on forthcoming economic data, especially if growth underperforms against projections.
