BSP Projects Economic Rebound After Infrastructure Spending Slowdown
Eli Remolona, the governor of the Bangko Sentral ng Pilipinas, said that the economy in the Philippines should start to pick up again in the 2nd half of 2026. He said that the rise in optimism was due to investors feeling more confident after a long period of uncertainty caused by corruption investigations that affected flood control infrastructure projects. In the 2nd half of 2025, spending on public infrastructure went down, which made things much slower.
During a media briefing in Mandaluyong City, Remolona talked about his views with journalists and public relations professionals. He said that investor sentiment had been hurt but was slowly getting better because institutions were responding more strongly. Financial markets have started to show that people are more hopeful about the long-term growth prospects of the economy.
Gross Domestic Product Growth Expected to Improve Gradually
The central bank said that the gross domestic product grew by about 4.5% in 2025. This number was still below the government’s goal range of 5.5% to 6.5%. Officials said that slow growth was mostly caused by delayed infrastructure projects and private investors being careful.
The economy grew much more slowly in the 3rd quarter of 2025, only 4%. This drop came after a stronger 5.49% growth in the previous quarter. By the end of September, the average annual growth rate was about 5%.
Source: Manila Standard
Forecasts Show Stronger Expansion in 2026 and 2027
Remolona said that if confidence keeps rising, the economy could grow by 5.4% in 2026. He also thought that output might grow by about 6.2% in 2027. These predictions depend a lot on the success of reform efforts and the stability of the financial system.
He stressed that rebuilding trust between investors from both inside and outside the country is still a top policy goal. It was said that regulatory clarity and institutional accountability are very important for medium-term economic performance. If confidence doesn’t come back, the projected growth rates could be lowered again.
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Corruption Crisis Seen as Opportunity for Systemic Reforms
Remolona said that the corruption scandal was a chance to make real changes to institutions. Authorities want to make prosecution stronger and work to get back misused public funds. Investigations have shown that there are systemic problems, and now administrative restructuring efforts are being made to fix them.
One of the suggested changes is to make the national tax system simpler so that there aren’t too many unnecessary reassessments. The government also wants to keep collecting taxes at a rate of 15% of GDP. The goal of these policies is to improve business confidence and compliance transparency while also making the economy more efficient.
Banking Sector Stability Supports Domestic Economic Activity
The governor of the central bank stressed that the Philippine banking system is still strong and well-capitalized. The amount of money available in commercial banks is still high enough to support household spending and business investment across the country. A stable financial sector lowers the risks that come with external economic shocks.
Strong capitalization ratios let banks keep giving loans to businesses that are doing well. Lending helps small businesses, infrastructure contractors, and manufacturers get back on their feet after recent slowdowns. This financial help is part of bigger efforts to stabilize the economy as a whole.
Monetary Policy Nearing End of Easing Cycle
According to Remolona, the central bank is getting closer to the policy interest rate range it wants. Inflation is still under control, so there is less need for aggressive tightening measures in the near future. Officials now prefer to keep rates the same or make small cuts if the economy gets worse.
He said that depending on how the economy looks in the future, there may be one more rate cut. If growth is slower than expected, the government may have to give limited monetary stimulus to boost domestic demand. But officials said that interest rates would not go up right away.
Investor Confidence Key Driver of Long Term Recovery Outlook
After political and administrative problems, restoring investor trust is very important for a long-term recovery. Improvements in the credibility of governance and the consistency of regulations have a big effect on international capital flows. Officials know that fixing a bad reputation is important for the economy to stay strong.
Remolona said again that open institutions help people plan for long-term investments that will stay stable. Companies can start hiring and expanding again when people have faith in them. Without this base, growth forecasts could lead to long-term poor performance in many areas of the economy.
