BMI, a unit of Fitch Solutions, officially lowered its 2026 gross domestic product (GDP) for the Philippines at 5.2% pointing a series of factors such as remittances slowdown, weaker investor sentiment, US tariffs on Philippine goods and the effects of the flood control corruption scandals, according to a Manila Bulletin news report.
To put things in perspective, posted below is an excerpt from the news report of the Manila Bulletin. Some parts in boldface…
Fitch Solutions’ unit BMI has sharply lowered its 2026 Philippine growth forecast to well below the government’s six- to seven-percent target, citing an expected slowdown in remittances, a weaker trade balance, muted investment sentiment, and downside risks to government spending stemming from the flood control fiasco.
“We expect remittance growth to slow due to tighter US [United States] immigration policy and a one-percent remittance tax on transfers from the US starting in 2026,” BMI said in a commentary published on Thursday, Oct. 23.
“A slowdown in remittances will weigh on domestic consumption, which will have an outsized impact on growth given the domestically driven economy,” BMI explained.
Against this backdrop, BMI has slashed its 2026 gross domestic product (GDP) growth forecast for the Philippines to 5.2 percent, one-percentage-point (ppt) lower than the 6.2 percent it projected previously.
If realized, this would also fall below this year’s growth goal of 5.5 to 6.5 percent, and 2024’s actual pace of 5.7 percent.
Another policy by US President Donald Trump that could drag down the local economy is the 19-percent tariff on Philippine exports, but zero tariffs imposed on select American imports.
This US-Philippines trade setup, according to BMI, “will weigh on the trade balance in 2026.”
Goods exports growth in August was the slowest in 2025 as US tariffs took effect and exporters’ front-loading of outbound shipments ended.
The latest Philippine Statistics Authority (PSA) data showed that goods exports grew by 4.6 percent year-on-year in August, marking the slowest increase since the 1.9-percent decline in December 2024
BMI also believes investor sentiment will “likely” remain muted next year as “erratic US trade policies will weigh on global investor sentiment and limit foreign direct investment inflows [FDIs].”
Domestically, government spending could bear the impact of a scenario where the ongoing flood control probe leads to the unearthing of more corruption cases tied to infrastructure projects beyond flood control.
“It could lead to even tighter scrutiny on government spending and reduce spending substantially below fiscally programmed levels,” BMI said. Capital outlays had dropped by 10 percent to ₱112.9 billion as of August, according to the Department of Budget and Management (DBM).
Infrastructure spending is expected to hit ₱1.51 trillion in 2025, ₱1.56 trillion in 2026, ₱1.69 trillion in 2027, ₱1.9 trillion in 2028, ₱2.03 trillion in 2029, and ₱2.2 trillion in 2030.
Meanwhile, BMI retained its 5.4-percent Philippine growth forecast for this year, still below the lowered full-year target.
Let me end this post by asking you readers: What is your reaction to this development? Are you convinced that due to several internal and external factors, economic growth of the Philippines will be slower this year and next year? Do you agree with BMI’s findings about the Philippine economy?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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