AMRO maintains PH forecast, flags oil risks

Title AMRO Maintains PH Forecast, Flags Oil Risks A Closer Look at Ec
Economic Outlook in 2026

The Association of Southeast Asian Nations (ASEAN) +3 Macroeconomic Researc
Research Office (AMRO) has recently released its latest forecast for the Ph
Philippine economy. According to the report, the country's growth rate is e
expected to maintain a positive outlook of 5.3% for 2026.

Why AMRO Maintains PH Forecast

Despite rising geopolitical tensions, AMRO's principal economist Allen Ng e
emphasizes that the Philippines has entered this period in healthy conditi
conditions, driven largely by domestic demand activities. This strong mome
momentum is expected to continue, with growth picking up to 5.8% next year.
year. However, Ng notes that if the Iran conflict had not occurred, the cou
country's growth could have been higher.

Oil Price Risks

The Philippines' heavy reliance on imported energy makes it more exposed to
to oil price shocks. AMRO expects inflation to trend upwards, driven mainly
mainly by supply-side pressures linked to energy prices. The inflation rate
rate is forecast to reach 3.9% this year, before easing to 3.6% next year.

While AMRO's baseline scenario does not expect double-digit inflation, the 
report highlights the risks of higher oil prices and their potential impact
impact on the economy. Risks are clearly tilted to the downside if oil pri
prices rise further and disruption becomes more prolonged, Ng warns.

Policy Advice

In response to the increased oil price risks, AMRO's chief economist Dong H
He advises policymakers to focus on mitigating supply-driven shocks rather 
than cutting interest rates. We don't see space for cutting rates at the m
moment because we see upside risks to inflation in the Philippines, he say
says.

The Bangko Sentral ng Pilipinas (BSP), the country's central bank, has alre
already kept its policy rate unchanged at 4.25% and may maintain this stanc
stance if inflationary pressures continue to rise.

Conclusion

In conclusion, AMRO's latest forecast for the Philippine economy maintains 
a positive outlook for growth in 2026. However, the report also highlights 
the risks associated with oil price shocks and their potential impact on th
the country's economic stability.

To mitigate these risks, policymakers must focus on diversifying energy imp
imports and implementing structural reforms to strengthen the economy's cap
capacity to withstand future shocks. By doing so, the Philippines can ensur
ensure a more resilient and sustainable economic outlook for 2026.

Laudable Efforts

In this context, laudable efforts by policymakers and economic planners are
are critical for achieving a robust economic growth in 2026. The report's f
findings underscore the importance of prudent policy decisions and strategi
strategic planning to navigate the complexities of global markets and mitig
mitigate the impact of external shocks.

By integrating key insights from AMRO's forecast into their decision-making
decision-making process, policymakers can ensure a more stable and prospero
prosperous economic future for the Philippines.

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Edward Lance Arellano Lorilla

CEO / Co-Founder

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