Metrobank Chief Economist and Markets Strategist Nicholas Mapa outlined five major themes expected to influence the Philippine economy in 2026, citing possible rate cuts by the Bangko Sentral ng Pilipinas (BSP) as early as December, a steeper yield curve, and the anticipated rebound of growth momentum.
These insights were shared during the 2025 Market Movers series, an exclusive economic briefing for clients that carried the theme, “Trump, Tariffs, and the Terminal Rate: The New Global Order.” The sessions provided perspectives to help investors and businesses navigate shifting global and domestic conditions. To strengthen the discussions, the event featured research and analysis from CreditSights and BMI, both under the global credit rater Fitch.
Mapa said that 2026 growth will likely be driven by the return of public construction and the delayed impact of monetary easing, which should begin to lift economic activity more visibly next year.
Below are the five key calls he identified for 2026:
The temporary fiscal pause this year may slightly weigh on short-term performance, but GDP growth is expected to gradually recover as capital formation and investments regain traction. The resumption of government spending and infrastructure programs is seen to support this turnaround.
Inflation, which fell below the BSP’s target this year, is projected to rise and approach the upper end of the 2–4% target range by mid-2026 due to base effects and possible increases in global commodity prices, including those influenced by U.S.-imposed tariffs. Despite this expected uptick, average full-year inflation is still seen to remain within the target.
The BSP is expected to remain dovish after its anticipated December rate cut, even as inflation trends close to 4% by mid-year. The central bank has already cut a total of 175 basis points from its peak policy rate of 6.50%, bringing it to 4.75% following its October 9 meeting. With price stability still manageable, the BSP is likely to maintain its focus on supporting softening growth momentum.
The Philippine yield curve is expected to steepen as monetary easing pulls short-term yields lower, while long-term yields rise due to government borrowing in the 10-year maturity range and gradually increasing inflation expectations. This may influence fixed-income strategies as investors position for shifting rate dynamics.
The Peso may continue to experience pressure even as the U.S. Federal Reserve maintains its rate-cutting cycle, which could weaken the dollar. Domestic factors, including the country’s current account deficit projected for 2026 and 2027, are expected to keep the local currency under strain.
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