S&P still bullish on Philippine growth

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March 26, 2026 | 12:00am

MANILA, Philippines —  S&P Global Ratings has slightly raised its growth forecast for the Philippines this year, citing a gradual recovery in investments and sustained strength in technology-driven exports, even as risks from energy disruptions and inflation persist.

Vishrut Rana, senior economist for Asia-Pacific at S&P Global Ratings, said the credit watcher now expects the Philippine economy to grow by 5.8 percent in 2026, a tad higher than its previous estimate of 5.7 percent.

“We have marginally raised our 2026 growth forecast for the Philippines to 5.8 percent, from 5.7 percent, reflecting a gradual normalization of investment and continued strength in technology-related exports,” Rana said.

The updated forecast places the Philippines below the government’s growth targets of five to six percent for 2026.

Despite the upward revision for this year, S&P trimmed its growth outlook for the succeeding years, pointing to softer domestic demand and a moderation in key sectors such as business process outsourcing.

The debt watcher lowered its gross domestic product (GDP) forecasts to 6.2 percent for both 2027 and 2028, from 6.5 percent for each year previously.

The revised figures are well within the government target of 5.5 to 6.5 percent for 2027 and six to seven percent for 2028.

“We have lowered our growth forecasts for 2027 and 2028 on slower domestic demand momentum and moderating growth in established sectors, such as BPO. We expect growth in the BPO and tech-related spaces to continue to be brisk, albeit slower than in recent years,” he added.

S&P flagged energy supply risks as a key vulnerability for the Philippine economy, given its heavy reliance on imports.

“Energy disruption is a key risk to the economy this year. The Philippines is significantly reliant on imported energy, a notable portion of which comes from the Middle East,” Rana said.

“Net energy imports accounted for about 3.3 percent of GDP in 2025. If energy supplies face sustained disruption, we see downside risk to our economic projections,” Rana said.

This exposure could feed into inflation pressures, prompting a potential shift in the Bangko Sentral ng Pilipinas (BSP)’s policy stance.

S&P expects the central bank to deliver a modest rate hike later this year, reversing part of its recent easing cycle.

“We expect a modest 25 basis point rate hike for the Philippines to 4.5 percent during 2026, based on the energy price outlook. Given inflation is contained, the BSP has policy space and is unlikely to tighten immediately,” he said.

“While we project average inflation to remain within the target range this year, the acceleration in price gains could be significant due to the potential impact of the energy shock. The central bank may also be watching the effects of a weaker currency,” Rana said.

The rating agency also raised its inflation forecasts for the Philippines to 3.4 percent this year (from 2.7 percent earlier) and 3.2 percent for 2027 (from three percent), reflecting the expected pass-through of higher energy costs to domestic prices.

S&P’s outlook underscores the Philippines’ resilience, supported by investments and export strength, but highlights growing external risks that could test both growth and price stability in the coming years