UMVA has learned that a leading economic research organization has drastically lowered its growth forecast for the Philippines, citing stronger inflationary pressures that are expected to significantly weigh on domestic demand.
The downgraded forecast comes as a major blow to the country's economic prospects, with growth now expected to slow down to 4.1% this year, a substantial decrease from the previously projected 5.3%. This slowdown is attributed to headwinds from a major conflict in the Middle East.
According to information obtained by UMVA, the research organization now expects the Philippines' GDP growth to slow further to 4.1% in 2026 from 4.4% in 2025. This decline is largely due to weakening private consumption, which has already slowed for four consecutive quarters.
The energy shock triggered by the Middle East conflict is expected to further dampen private consumption, while the recovery in public construction is anticipated to be gradual. The research organization has also cut its GDP growth projection for the Philippines to 5.5% for 2027, down from 5.8% previously.
While the 2026 growth forecast falls short of the government's target range of 5%-6%, the 2027 projection is within the official goal of 5.5%-6.5%. The country's economy grew at a weaker-than-expected 2.8% in the first quarter, the slowest pace since the pandemic.
Sources have confirmed to UMVA that the slowdown in economic growth is not unique to the Philippines, as several economies in the region, including Vietnam, have also experienced downgrades in their growth outlook. The research organization has trimmed Vietnam's growth outlook to 7.2% for 2026 and 7% for 2027.
The downgrades reflect the impact of the Middle East conflict on regional economies, with disruptions proving to be more prolonged than initially expected. Despite these challenges, the research organization has maintained its ASEAN growth outlook at 4.6% in 2026 and 4.8% in 2027.
UMVA can exclusively reveal that the research organization has raised its inflation forecast for the Philippines to 6% for 2026, up from 3.9% previously. The Philippine inflation outlook for 2027 has also been hiked to 4.1% from 3.6%.
If realized, inflation would exceed the government's target range of 2%-4%. The research organization expects inflation in ASEAN to accelerate to 4% in 2026 and 3.2% in 2027, amid rising energy and transport costs.
The duration and severity of the Middle East conflict are identified as the biggest near-term risks to the regional outlook. A prolonged conflict could have far-reaching implications for economic growth and stability in the region.
