For Capital Economics, the economic growth of the Philippines will end up disappointing by finishing below the national government’s targets until the middle of 2028, according to a news report by the Manila Bulletin. Capital Economics also sees the inflation rate of the country reaching 5.6% this year.
To put things in perspective, posted below is an excerpt from the news report of the Manila Bulletin. Some parts in boldface…
The Philippine economy is expected to “disappoint” until the end of the Marcos Jr. administration in 2028 as the lingering effects of the energy shock, weak business confidence, tighter fiscal policy, and El Niño weigh on recovery, according to think tank Capital Economics.
In a report last Tuesday, Sept. 29, Capital Economics forecast Philippine gross domestic product (GDP) growth at just three percent in 2026, before picking up to 4.5 percent in 2027, and 5.5 percent in 2028.
Capital Economics’ forecasts for 2026 and 2027 fall short of the government’s downgraded economic growth targets of 3.5 to 4.5 percent and five to six percent, respectively, while the 2028 projection falls within the five- to six-percent target but remains below the economy’s estimated potential annual growth of about six percent.
Despite the gradual recovery, Capital Economics noted that its growth forecasts for the Philippines from 2026 through 2028 remain below consensus estimates.
“The Philippines has been among the hardest hit economies globally by the energy shock and the recovery will be sluggish,” Capital Economics said.
The think tank noted that the Philippine economy was already on weak footing, even before the global energy crisis caused by the war in the Middle East, due to the fallout from the multibillion-peso flood-control corruption scandal. As such, GDP growth slowed further to a post-pandemic low of 2.3 percent year-on-year in the second quarter.
Capital Economics also cited that the second-quarter GDP expansion was the weakest outside the Covid-19 pandemic and the global financial crisis in 2008 to 2009, while pointing to more timely indicators such as purchasing managers’ indexes (PMIs), which have provided mixed signals on economic activity in the third quarter.
The Philippine economy grew by an average of 2.6 percent during the first half of 2026, well below the government’s full-year growth target.
Capital Economics sees elevated global energy prices keeping Philippine inflation above six percent for the rest of the year, which the think tank said would dampen consumer spending.
Headline inflation eased slightly to 6.1 percent last August, but the Bangko Sentral ng Pilipinas (BSP) expects the September rate to settle within the 6.4- to 7.4-percent range, potentially accelerating amid higher oil and food prices, plus a weaker peso.
Inflation averaged 5.2 percent during the first eight months of 2026, way above the government’s two- to four-percent target band for manageable year-on-year consumer price hikes.
Capital Economics expects Philippine inflation to average 5.6 percent this year, before easing to a within-target three percent next year and 2.3 percent in 2028.
Let me end this post by asking you readers: What is your reaction to this recent development? Considering all the factors and what has happened economically over the past six months, are you convinced that there is no way to boost the nation’s economic growth this year? Do you think the government has been negligent with economic management? Do you find it ironic that as host of the ASEAN Summit, the Philippines is looking like the economic weakling of ASEAN?
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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