By Katherine K. Chan, A reporter
THE PHILIPPINE ECONOMY is like that is on track to bounce back this year as business confidence has picked up to develop, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr.
“It seems that (confidence) has started to return,” said a central bank official during the Management Association of the Philippines (MAP) event on Wednesday in Taguig City. “Not as fast as we would like, but it’s coming back.”
“In our forecasts, we think we will return to normal in time second half of 2026,” he added.
Mr. Remolona noted that the lack of confidence amid the graft scandal has halted the country’s economic growth in the second half of 2025.
In the fourth quarter of 2025, the Philippines’ gross domestic product (GDP) grew by 3%, the slowest pace in 14 years (except for the pandemic), as investment and spending slowed amid the conflict over flood control.
This pushed full-year economic growth to 4.4 percent post-pandemic, below the BSP’s forecast of 4.6 percent and the government’s target of 5.5 percent-6.5 percent.
However, recent indicators, such as the S&P Global Manufacturing Purchasing Managers’ Index (PMI) and the Philippine Stock Exchange index (PSEi), have shown that business confidence is slowly returning and the economy may be on the road to recovery.
The latest data showed that the Philippines’ manufacturing PMI rose to a nine-month high of 52.9 in January from 50.2 in December.
The PSEi rose to a nearly seven-month high on Wednesday, even rising above the 6,500 line during the session. The PSEi rose 0.37% or 24.22 points to close at 6,498.82, its best close in nearly seven months or since it closed at 6,525.04 on July 14, 2025.
By 2026, the central bank projects GDP to grow by 5.4%.
However, Mr. Remolona said they are reviewing a possible revision to their growth forecast.
Speaking to reporters on the sidelines of the MAP event, Mr. Remolona said the revival of confidence, along with inflation returning to target, is likely to reduce the central bank’s position.
Asked if the BSP can still lower rates again to support the economy, Mr. Remolona said: “It is a possibility. Again, it is based on the data. We have to review the data.”
The benchmark interest rate currently stands at 4.5%, the lowest in three years.
The Monetary Board has so far delivered 200 basis points (bps) of cuts since it began its easing cycle in August 2024, including five straight 25-bp cuts last year.
Mr. Remolona noted that stabilizing inflation remains their first task in determining the path of monetary policy.
“If we can keep prices stable, that will help with confidence,” he said.
In January, headline inflation reached 2%, marking a return to the BSP’s 2%-4% target for the first time in over a year.
INFLATION
Meanwhile, BSP Vice Governor Zeno Ronald R. Abenoja said inflation may reach 3% in the coming months before it breaks in the second half of the year.
“If you look at the path of inflation in our MPR (monetary policy report), it will gradually move closer to 3% and possibly a little more than 3% (in the) second half,” he told reporters on the sidelines of the same event. “But in the background that is, it will be close to 3% again and settle in that place.”
Mr. Remolona noted that he has no problem with inflation lowering his targets a bit but said that printing more than 3% is a big concern for him.
The BSP expects inflation to reach 3.2% annually, before slowing to 3% in 2027.
