THE Philippines will still post an economic rebound this year despite rising geopolitical tensions, the Asean+3 Macroeconomic Research Office (AMRO) said on Monday, but risks from higher oil prices are increasing due to the country’s heavy reliance on imported energy,
“The forecast is the same as what it was in January, [and] not because we didn't incorporate the impact of the situation in Iran,” AMRO principal economist Allen Ng told reporters in a briefing.
“I think there was strong momentum in growth in the Philippines prior to the escalation of the conflict, and it's driven a lot by domestic demand activities,” he added.
AMRO kept its 2026 growth forecast at 5.3 percent, within the government’s 5.0- to 6.0-percent target.
“If the Iran conflict has not occurred, the growth could have been higher for the case of the Philippines,” Ng said.
AMRO expects growth to pick up to 5.8 percent next year, also within the official 5.5- to 6.5-percent target.
The economy, Ng said, entered the current period of heightened geopolitical uncertainty in “healthy conditions,” supported largely by domestic demand that has helped cushion the potential impact of external shocks.
The country, however, remains among the more exposed economies in the region due to its dependence on imported oil, which is expected to drive inflation up, but not beyond the 2.0- to 4.0-percent target.
“The Philippines is one of the more exposed economies in our region since 98 percent of oil and gas imports are from the Middle East. And so, we are expecting, in our baseline, for inflation to trend upwards,” Ng said.
AMRO raised its inflation forecast for the country to 3.9 percent from 3.2 percent, to be driven mainly by supply-side pressures linked to energy prices.
The rate was forecast to ease to 3.6 percent next year.
Ng said inflation was unlikely to reach double-digit levels under AMRO’s baseline scenario.
“Risks are clearly tilted to the downside if oil prices rise further and disruption becomes more prolonged,” he said.
“I think the key point that we wanted to highlight is the fact that, in this environment, the policy priority is really to stop a supply-driven shock from becoming broader and more persistent.
AMRO chief economist Dong He, meanwhile, said: “We don't see space for cutting rates at the moment because we see upside risks to inflation in the Philippines.” “So the policy advice is really to probably wait and see, and see how long the shock would last. I think it's the persistence of the shock that matters.” The Bangko Sentral ng Pilipinas’ policymaking Monetary Board kept the policy rate unchanged at 4.25 percent during an off-cycle meeting last month.
BSP Governor Eli Remolona Jr. has also said that rates could remain steady at the April 23 policy meeting.
If inflationary pressures continue and move beyond the central bank’s target range, He said tighter monetary policy could be considered.
However, “the Philippine economy was performing quite well last year. It has entered this period in pretty healthy conditions, so we are confident that the economy can manage this shock,” He added.
“It has policy space and over the longer term, of course, there are more structural challenges that the economy needs to face, particularly to strengthen its capacity to deal with shocks like climate change,” he continued.
“In terms of energy-related [shocks], I think it's important to diversify the source[s] of energy imports and those policy measures would help the economy to withstand future shocks.”
