Moody’s lowers Philippine growth forecast for 2026 to 3.3 per cent

High energy costs and subdued investment have prompted Moody’s Ratings to cut its 2026 Philippine economic growth projection to 3.3 per cent, compared with its previous estimate of 3.6 per cent. The agency attributed the energy price pressures to the conflict in the Middle East.

Moody’s anticipates a recovery in real gross domestic product growth to 5.1 per cent in 2027, supported by improving confidence and stronger investment. That would nevertheless fall short of the 5.3 per cent expansion it forecast in August.

The agency said the country’s growth dynamics remained stronger than those of similarly rated economies, citing infrastructure spending, remittances and investment reforms. Remittances, which represent around eight per cent of GDP, help sustain household spending and offer a steady source of external financing, it said.

Investment liberalisation, public-private partnership reforms and progress in executing projects should raise investment and productivity over the medium term, Moody’s said. It cautioned, however, that delays or disappointing investment could undermine confidence and growth. Reviews of infrastructure planning, budgeting and procurement had uncovered governance weaknesses that contributed to project delays and reduced investor confidence.

Moody’s projects a general government deficit of around four per cent of GDP in 2026, compared with 4.1 per cent in 2025. It warned that slower revenue growth, implementation problems and spending pressures ahead of elections could hinder fiscal consolidation. Government debt is forecast to hold at around 58 per cent of GDP over the next two years, then gradually fall.