BSP sees PH economic growth to gradually start recovery mid-2026

Philippine economic growth could slow down to as low as 4% this year with a gradual recovery seen to start by the middle of 2026, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said Wednesday.

Speaking with reporters at the central bank headquarters, Remolona said growth is expected to fall to between 4% to 5% this year, below the government's already trimmed down target range of 5.5% to 6.5%.

"I think we all agree that for 2025, growth will be slow. We think maybe 4%, between 4% and 5%, but the recovery should start by 2026, maybe middle of 2026, and then we should be back on track by 2027," he said.

"Parang bagsak tayo sa 2025, plus kaunting recovery sa 2026. (Looks like we'll dip in 2025, plus a bit of recovery in 2026). Stronger recovery by 2027," he added.

Department of Economy, Planning, and Development (DepDev) Secretary Arsenio Balisacan conceded earlier this week that the Philippines will likely miss its economic growth target for the third straight year.

"One reason for part of the decline in 2025 is because the government also cut its spending in order to review the flood control projects and other projects, but the main reason is probably the loss of confidence by investors," Remolona said.

"The stock market has recovered, so that kind of shows that confidence is coming back. S&P reaffirmed our positive outlook, which means we're still on track for an upgrade in our ratings, so the signs suggest that confidence is returning," he added.

Both chambers of Congress are currently looking into alleged irregularities in public works spending, after President Ferdinand "Bongbong" Marcos Jr. in August disclosed that 20% of the total P545-billion budget for flood control projects went to only 15 contractors, which he described as a "disturbing assessment."

The administration has also established the Independent Commission for Infrastructure (ICI), in response to public calls for greater transparency and accountability in infrastructure spending. It is tasked to conduct an in-depth investigation into the alleged irregularities and misuse of funds in flood control, and other infrastructure projects.

Despite the latest figures, Remolona said further policy easing during the Monetary Board's meeting later this month "is not assured."

Remolona was also called to Malacañang on Wednesday, as he said he would be briefing newly installed Finance Secretary Frederick Go, who was appointed last month. He is scheduled to take a seat in the Monetary Board next year. — VDV, GMA Integrated News