Philippines Q4 Growth Forecast Exceeds Four Percent, UA&P Says

Philippine Economy Eyes Q4 Rebound

The University of Asia and the Pacific (UA&P) projects Philippine economic growth will exceed four percent in the fourth quarter of 2026. This expansion reflects a rebound in infrastructure spending and stronger domestic demand. This outlook contrasts with a projected tepid third-quarter performance.

UA&P suggests Q3 gross domestic product (GDP) growth will resemble Q2's 2.3 percent, impacted by August floodings and delayed infrastructure projects. However, June's record employment figures, export performance, and overseas Filipino workers' (OFW) remittances help shield the economy from these temporary disruptions.

2027 Outlook and Government Targets

The economy grew by 2.6 percent in the first half of 2026. This fell short of the government's revised 2026 growth target of 3.5 to 4.5 percent. UA&P expects growth to pick up further in 2027. Key drivers for the coming year include a return of government infrastructure spending, softer crude oil prices, and improved demand conditions. The government aims for a 5–6 percent growth rate in 2027, signalling continued focus on economic expansion.

Inflation, Employment, and Monetary Policy

Inflation may remain above target until 2027, UA&P suggests. Factors include a minimum wage increase in the National Capital Region, uncertain Middle East negotiation procedures, agricultural damage from heavy rains, and a potentially aggressive El Niño. Inflation slowed to 6.1 percent in August from 6.2 percent in July.

While June saw record employment of 50.8 million, UA&P anticipates moderation. The wage hike could raise labour costs and reduce firms' hiring appetite. The Bangko Sentral ng Pilipinas (BSP) recently raised rates by 25 basis points (bps) to five percent; UA&P expects one more 25-bps hike this year.

Remittances and Currency Pressures

UA&P forecasts low single-digit growth for remittances through the rest of 2026. Lingering host-country inflation and Middle East deployment friction pose downside risks to the BSP's full-year cash remittance growth target of 2.7 percent, or $36.6 billion. Cash remittances for the first half of 2026 reached $17.15 billion, a 2.4 percent increase from the previous year.

Short-term pressures from oil price volatility and trade deficits may push the Philippine peso to 63 per dollar. Businesses should monitor these currency movements and potential cost implications.