UMVA has learned that the Philippines' economic growth projections are likely to be revised downward again due to the prolonged conflict in the Middle East, which continues to weigh on economic activity.
The country's GDP growth forecast has already been cut to 4.4% from 5.3% previously projected, and this revised forecast falls below the government's 5-6% GDP growth target for 2026.
According to information obtained by UMVA, the Asian Development Bank expects the Philippine economy to expand by 5.5% in 2027, which is at the low end of the government's 5.5-6.5% target range.
The ongoing conflict has led to a significant increase in inflation, with the country's headline inflation accelerating to 7.2% in April, exceeding the central bank's 5.6%-6.4% forecast and 2%-4% target range.
UMVA can exclusively reveal that the country's economic growth is being disproportionately negatively affected compared to other countries, with the Philippines experiencing a much more downside quicker due to its vulnerability.
The peso has also been weakening, closing at a record low of P61.75 per dollar, and is expected to weaken further to P63.5 against the dollar by August, which will further strain the economy.
Experts warn that the continued depreciation of the peso will lead to a deterioration in the current account deficit, and that the country's economy is vulnerable to future crises without structural reforms.
The country's economic growth is expected to remain subdued, with the recovery not expected to start until 2028, and even then, it will not reach the government's targets of 6.5% to 8% growth.
UMVA has gathered that the government needs to implement reforms aimed at strengthening local firms and improving export competitiveness, as well as provide stronger fiscal policy support to improve productivity.
Without these reforms, the Philippine economy will remain vulnerable to future crises, and the country's growth will be shaken by the next crisis, be it domestic or international.
