THE Asia-Pacific economic growth outlook has become even more complicated due to war in the Middle East and the Philippines will likely keep missing official targets to 2028, Moody’s Analytics said.
The region, already “on a fragile footing” entering 2026, could see growth slow to 4.0 percent from 4.3 percent last year and decelerate even further to 3.6 percent in 2027.
Moody’s trimmed its baseline outlooks for the Philippines to 4.9 percent for this year and 5.2 percent for 2027, from 5.1 percent and 5.4 percent previously, and kept that for 2028 at 5.3 percent.
All forecasts fall below the government’s targets of 5.0–6.0 percent for 2026, 5.5–6.5 percent for 2027, and 6.0–7.0 percent for 2028.
For the Philippines, the risks are particularly tied to its reliance on imported energy and exposure to global commodity markets.
The latest baselines, Moody’s Analytics economist Sarah Tan told The Manila Times on Monday, assume that the war in the Middle East stays contained and ends “relatively soon.”
“Risks to the outlook remain firmly to the downside,” she also said.
“The Philippines is particularly vulnerable to an energy price shock, as it is a net importer of fuel and many consumption goods, with more than half of its energy needs sourced from abroad and no meaningful strategic reserves, leaving the economy highly exposed to higher oil and food prices,” Tan continued.
Costlier imports will “feed into inflation, widen the trade deficit, and put pressure on the currency, which could force the Bangko Sentral ng Pilipinas to pause its easing cycle or even tighten policy if second-round effects emerge.”
High prices, if sustained, are expected to dampen consumption and power costs — already among the highest in the region — “would further weigh on business activity and overall growth.”
Philippine inflation is expected to remain within the government’s 2.0- to 4.0-percent target at 2.5 percent this year but could increase to 3.1 percent in 2027, Moody’s said.
For the region, meanwhile, 2026 “is shaping up to be an even more difficult year for the region than originally envisaged,” it said.
In addition to the war in the Middle East, Moody’s also flagged the issue of US tariffs, which remain in flux amid a Supreme Court ruling striking down initial increases and President Donald Trump’s push to raise duties using other aspects of US trade law.
“Our baseline assumption is that US import tariffs will stay at current levels through 2028,” Moody’s said.
The region’s strong exposure to the global technology cycle is another source of uncertainty, meanwhile, and Moody’s cautioned that the artificial intelligence boom could cool.
“While the AI boom is powering ahead, stretched equity valuations, alongside price spikes and isolated hardware shortages, suggest it is increasingly ripe for a pause,” it said.