THE Philippines’s economic momentum is at risk of further weakening next year, as waning consumption, softening remittances and fading investment appetite add up to global trade uncertainty.
In a commentary, BMI, a Fitch Solutions Company, said it has revised its economic growth forecast for next year downward from 6.2 percent to 5.2 percent.
This is lower than the Cabinet-level Development Budget Coordination Committee’s (DBCC) growth target of 6 percent to 7 percent for 2026.
‘Headwinds to growth are mounting,’ it said, citing expectations of a slump in remittances due to tighter US immigration policy coupled with a 1-percent remittance tax on transfers starting in 2026.
‘A slowdown in remittances will weigh on domestic consumption, which will have an outsized impact on growth given the domestically driven economy,’ BMI said.
The trade deal between the Philippines and the United States, which maintains 19 percent tariffs on Philippine goods while granting American products tariff-free access, will dampen the country’s trade balance in 2026, it added.
Investment sentiment is also likely to remain weak next year, as ‘erratic’ US trade policies are expected to sour global investors and limit foreign direct investment inflows.
Moreover, if the ongoing probe on flood control also uncovers corruption across other infrastructure projects, BMI said this could push actual spending below what the government planned and potentially hurt the economy.
Infrastructure spending has already begun to decline, as adverse weather conditions and tighter oversight have pushed back project implementation.
Latest data from the Department of Budget and Management (DBM) showed infrastructure expenditure and other capital outlays dropped by 21.8 percent year-on-year to P84.9 billion in August from P108.6 billion.
Even Finance Secretary Ralph G. Recto said that the government could miss its growth target of 5.5 percent to 6.5 percent this year due to slower government spending.
‘The good news is, moving forward, all of that is on the upside because we are solving the problem [on infrastructure projects]. So moving forward, you will realize your full potential for growth,’ Recto said earlier.
For 2025, BMI kept its growth forecast at 5.4 percent, after robust domestic consumption and frontloading activity supported the first half of the year.
However, growth is expected to moderate in the second half due to weak infrastructure spending and subdued investment activity, given the uncertain global environment.
‘The probe into alleged corruption has also worsened investment sentiment, with the Philippine Stock Exchange index [PSEi] closing at a near six-month low as of 30 September 2025,’ BMI added.
On the production side, the manufacturing sector contracted in September for the first time in six months, pulling the aggregated quarterly Purchasing Managers’ Index to its lowest since the third quarter of 2021. Exports also posted a sharp month-on-month slowdown in August.
BMI forecasts the GDP growth to reach 6.2 percent in 2027 and 6.3 percent in 2028.
These are within the DBCC’s growth target of 6 to 7 percent for the years 2026 to 2028.