OECD forecast: ‘Philippines to post 3.2% growth this year’

MANILA, Philippines — The Philippine economy is expected to post slower growth this year with high inflation likely to dampen consumer spending, according to the Organization for Economic Cooperation and Development (OECD).

In its Economic Outlook for June 2026, the OECD said it expects the Philippines economy to grow by  just 3.2 percent this year, down from its earlier forecast of 5.1 percent.

The new growth forecast is slower than the 4.4-percent growth achieved in 2025.

It is likewise below the government’s five to six percent growth target for this year.

For 2027, the OECD expects the economy to grow at a faster pace of five percent.

However, the new 2027 growth forecast is lower than the earlier 5.8 percent projection. It is also below the 5.5 to 6.5 percent GDP growth that the government aims to achieve next year.

The economy grew by 2.8 percent in the first quarter — the slowest pace in five years — as the flood control controversy and high prices from Middle East tensions weighed on consumption and investment.

“Private consumption will soften as higher inflation and weaker labor market conditions weigh on real incomes, but public investment is expected to recover gradually following its late 2025 contraction,” OECD said.

It said that the recovery in public investment hinges on the pace of project implementation.

OECD expects inflation to rise amid higher energy prices and the depreciation of the peso against the dollar.

Specifically, the OECD sees inflation hitting 6.8 percent this year, before easing to four percent in 2027.

Inflation accelerated to 7.2 percent in April from the previous month’s 4.1 percent as the oil shock triggered by the Middle East conflict continued to drive up prices.

This brought average inflation from January to April to 3.9 percent, still within the government’s two to four percent target range.

As inflation picks up, the OECD expects further monetary tightening, with the policy rate rising to 5.75 percent this year before easing to five percent in 2027.

The Bangko Sentral ng Pilipinas raised the key policy rate by 25 basis points to 4.5 percent in April.

Risks to the outlook are tilted to the downside as persistently higher energy prices are expected to push up other costs and weigh on consumption.

The OECD also said that weaker remittances and a slower recovery in public investment could dampen domestic demand.

On the upside, it said stronger capital inflows following the easing of foreign investment restrictions could drive investment and growth.

“Improving the investment climate and productivity would support growth,” OECD said.