THE ASEAN+3 Macroeconomic Research Office (AMRO) lowered its Philippine growth forecast for this year and in 2027, as stronger inflationary pressures are expected to weigh on domestic demand.
In its Interim Update of the ASEAN+3 Regional Economic Outlook released on Tuesday, AMRO slashed its 2026 growth forecast for the Philippines to 4.1% from 5.3% previously.
“The Philippines’ GDP growth is expected to slow further to 4.1% in 2026 from 4.4% in 2025, facing headwinds from the Middle East conflict,” AMRO Group Head and Lead Economist Jinho Choi told BusinessWorld.
“Private consumption — which has already slowed for four consecutive quarters through the first quarter of 2026 — is expected to weaken further due to the energy shock, while the recovery in public construction is expected to be gradual,” he added.
AMRO also cut its gross domestic product (GDP) growth projection for the Philippines to 5.5% for 2027, from 5.8% previously.
While AMRO’s 2026 growth forecast falls short of the government’s 5%-6% target, its 2027 projection is within the official 5.5%-6.5% goal.
The Palace earlier said the Development Budget Coordination Committee revised its macroeconomic assumptions, but new figures have yet to be released.
The Philippine economy grew by a weaker-than-expected 2.8% in the first quarter, the slowest pace since the pandemic, as the fallout from a corruption scandal and soaring oil prices triggered by the Middle East conflict hurt economic activity.
“ASEAN growth has been downgraded in some economies, including the Philippines and Vietnam, where stronger inflation passthrough is expected to weigh on domestic demand,” AMRO said.
AMRO had trimmed Vietnam’s growth outlook to 7.2% for 2026 and 7% for 2027, from 7.4% and 7.1%, respectively.
AMRO’s interim report reflected the impact of the conflict in the Middle East on ASEAN economies, as disruptions proved to be more prolonged than initially expected.
Despite the downgrades for some economies, AMRO maintained its ASEAN growth outlook at 4.6% in 2026 and 4.8% in 2027. Its ASEAN+3 projection was unchanged at 4% for both years.
“ASEAN+3 growth has remained resilient, supported by firm domestic demand and technology exports. But incipient signs of stress are emerging,” AMRO Chief Economist Dong He said in a statement on Tuesday.
He said higher energy and transport costs are feeding into inflation and adding pressure on industrial supply chains amid prolonged disruptions caused by the Middle East conflict.
“If the conflict persists, these pressures could broaden and weigh on regional growth,” Mr. He said.
At the same time, AMRO raised its 2026 inflation forecast for the Philippines to 6% from 3.9%. It also hiked the Philippine inflation outlook to 4.1% for 2027, from 3.6%.
If realized, inflation would exceed the government’s 2%-4% target range.
“Consumer price index is projected to rise to 6% in 2026 from 1.7% in 2025, reflecting the upside inflation surprise in April (7.2%) and revised expectations of higher-for-longer global oil prices,” said Mr. Choi.
AMRO expects inflation in ASEAN to accelerate to 4% in 2026 and 3.2% in 2027, amid rising energy and transport costs.
Inflation in ASEAN+3 is projected to settle at 1.8% in 2026 and 1.5% in 2027.
“Higher energy and industrial input costs, alongside continued tariff uncertainty, are expected to impact the region unevenly, with net energy importers and economies exposed to affected inputs facing stronger headwinds,” AMRO said.
AMRO said the duration and severity of the Middle East conflict are the biggest near-term risks to the regional outlook.
It said that if oil prices average $125 per barrel in 2026, compared with its baseline assumption of $95, ASEAN+3 growth could slow to 2.5% while inflation could accelerate to 3.5%.
“Excluding the COVID-19 pandemic years, this would mark the highest regional inflation in more than a decade and the slowest growth since the Asian Financial Crisis,” it added. — Justine Irish D. Tabile
