Expert remains optimistic on PH economy amid global uncertainties - THEPHILBIZNEWS
Despite mounting global and domestic challenges, the Philippine economy retains a cautiously optimistic outlook for the second half of 2026, supported by resilient electronics exports and opportunities arising from the global artificial intelligence (AI) investment boom, according to the ASEAN+3 Macroeconomic Research Office (AMRO). In its latest assessment, AMRO said the Philippines is likely to […]
Despite mounting global and domestic challenges, the Philippine economy retains a cautiously optimistic outlook for the second half of 2026, supported by resilient electronics exports and opportunities arising from the global artificial intelligence (AI) investment boom, according to the ASEAN+3 Macroeconomic Research Office (AMRO). In its latest assessment, AMRO said the Philippines is likely to face significant headwinds in the months ahead, including elevated inflation, weaker public investment, and increasing pressure on service exports as AI reshapes the global business landscape. Even so, the regional macroeconomic surveillance body believes several positive factors could help sustain economic growth. The Philippine economy entered 2026 on a weaker footing than expected, with gross domestic product (GDP) growth slowing for a third consecutive quarter to2. 8%in the first quarter. Inflation also accelerated, reaching6. 45%in June. AMRO identified surging inflation as one of the country’s biggest challenges. As a major net energy importer, the Philippines has been hit by rising global oil prices linked to the ongoing conflict in the Middle East, pushing up transport and food costs. Core inflation climbed to4. 4%in June, its highest level in more than two years. The regional think tank expects headline inflation to average6. 0%in 2026, a sharp increase from1. 7%in 2025, and remain above the Bangko Sentral ng Pilipinas’ (BSP)2% to 4%target range in 2027. Public investment has also weakened following corruption allegations that emerged in mid-2025, which led to delays and cancellations of several infrastructure projects. As a result, public construction contracted by31. 5% year-on-yearin the first quarter of 2026. AMRO expects infrastructure spending to gradually recover in the second half of the year, although the pace of the rebound will depend on how quickly the government resumes strategic projects, including roads, bridges, schools, and healthcare facilities. The report also flagged risks facing the Philippines’ information technology and business process management (IT-BPM) industry, which remains heavily concentrated in routine functions that are increasingly susceptible to AI-driven automation. Reflecting these challenges, exports of information and communication technology (ICT) and other business services expanded by only4. 4%, their slowest growth in five years. Tourism, meanwhile, has yet to fully recover to pre-pandemic levels. Despite these concerns, AMRO said the Philippines also has important growth drivers that could help offset the risks. Among the strongest tailwinds is the global surge in AI-related investments, which continues to boost demand for semiconductors and other electronic products. Electronics account for more than half of the country’s merchandise exports, positioning the Philippines to benefit from sustained global demand. While exports of other products may remain subdued, semiconductor shipments are expected to stay resilient, supported by AI-driven demand. However, AMRO noted that the Philippines is likely to see more modest gains than some of its regional peers because of differences in industrial capacity and export composition. The report underscores that while inflationary pressures, slower infrastructure spending, and structural changes in the services sector present significant challenges, the country’s resilient export sector and emerging AI-related opportunities provide reasons for cautious optimism as the economy navigates an increasingly uncertain global environment.