Two of the world's better-known forecasters now see 2026 growth below 3 percent, with a weak peso, a wide current account deficit and a central bank that has already hiked three times.
Bank of America (BofA) Global Research says Philippine economic growth will stay below 3 percent in 2026. "We see gross domestic product (GDP) growth staying below three percent in 2026," the bank said, according to The Philippine Star's Keisha Ta-Asan, in a report published Oct. 9. BofA based its view on meetings in Manila on Oct. 5 with government officials, private-sector analysts and local investors.
The Star's article, as published, records no government response to the forecast.
The numbers behind the call
According to the Star, GDP grew 2.8 percent in the first quarter and 2.3 percent in the second. BofA blames weak household consumption and sluggish investment, saying government and private spending are not enough to drive a stronger rebound. It sees investment improving slightly in the second half, and growth recovering modestly to 3.5 percent in 2027 if global oil prices ease and international interest rates stay relatively stable. Even then, it expects the economy to keep operating below its potential.
On the external side, BofA says the current account deficit reached 6.4 percent of GDP in the first half, well above the below-3-percent level it considers manageable. It warned that the peso could stay under pressure, and that most investors it consulted expect it to weaken beyond 63 per dollar. Weaker growth, elevated inflation and fiscal pressures have, the bank says, weighed on sentiment toward government bonds, making shorter-dated securities look more attractive.
Rates: three hikes, maybe a fourth
BofA notes the Bangko Sentral ng Pilipinas (BSP) has raised its benchmark rate three times this year, to 5 percent. The bank had previously expected 5 percent to be the peak; it now says the chance of further hikes has risen, and that rising oil prices raise the likelihood the BSP will revise its 2026 and 2027 inflation forecasts upward. It added that aggressive hikes could be followed by sharp cuts in 2027 or 2028 if inflation falls substantially.
That tracks with S&P Global Ratings. In a Sept. 24 Manila Times report by Niña Myka Pauline Arceo, S&P said it expects another 25-basis-point hike before year-end, ending 2026 at 5.25 percent, and projects inflation averaging 5.5 percent this year, up from 1.7 percent in 2025. S&P cut its 2026 growth forecast to 2.9 percent from 4.1 percent, and lowered 2027 to 5.4 percent. The Manila Times report says the peso lost more than 5 percent against the dollar through mid-September.
Analysis: the budget is being sold as the fix
This section is analysis, not reported fact. BofA says government spending plans could support a better 2027 if they gain momentum. That is the thesis behind the ₱7.2-trillion 2027 budget the House approved on second reading last week by voice vote, with about ₱116 billion in late amendments. But Pulpulitiko has also reported that interest payments alone take ₱1.114 trillion of that budget, and that national debt hit a record ₱19.61 trillion at end-August with the weak peso doing part of the borrowing. A government that must spend its way out of a slowdown while paying record interest and defending a falling currency is working with less room than the budget's headline figure suggests.
What is not known
- How the economic managers will answer BofA and S&P. The Star report does not include any official reaction, and this reporting did not find one.
- Whether the government has formally revised its own 2026 growth target. The sources reviewed for this story do not state it.
- What the BSP will do at its remaining meetings, in October and December, per the Manila Times.
Sources
- Keisha Ta-Asan, "BofA sees below 3% growth for Philippines," The Philippine Star, Oct. 9, 2026 — https://www.philstar.com/business/2026/10/09/2561832/bofa-sees-below-3-growth-philippines
- Niña Myka Pauline Arceo, "S&P sees further BSP rate hike as inflation, peso risks persist," The Manila Times, Sept. 24, 2026 — https://www.manilatimes.net/2026/09/24/business/top-business/sp-sees-further-bsp-rate-hike-as-inflation-peso-risks-persist/2431764
- Pulpulitiko, "House Passes ₱7.2-Trillion 2027 Budget on Second Reading by Voice Vote, With ₱116 Billion in Last-Minute Amendments," Oct. 7, 2026
- Pulpulitiko, "As House Rushes the 2027 Budget, ₱1.114 Trillion Goes to Interest Alone," Sept. 29, 2026
- Pulpulitiko, "National Debt Hits a Record ₱19.61 Trillion as the Peso Does Some of the Borrowing for Government," Oct. 3, 2026
