Philippines GDP Slows as Inflation Concerns Rise: BofA

BofA Reports Philippine GDP Slowdown and Rising Inflation

Bank of America's latest report indicates the Philippine economy grew 2.8% year-over-year in the first quarter of 2026, falling short of the 3.3% consensus estimate. The bank maintains its full-year 2026 GDP growth forecast at 2.0%.

Economic Overview

The economic slowdown was broad-based, with industrial production and agriculture contracting by 0.2% and 0.1%, respectively. The services sector provided a bright spot, expanding by 4.5%. A significant concern is the 3.3% year-over-year decline in investment spending, marking its third consecutive quarterly contraction.

Economic and Market Impact

Following a 7.2% inflation reading in April, BofA forecasts price pressures will intensify, potentially peaking near 10% in the fourth quarter of 2026. Consequently, the bank anticipates the Bangko Sentral ng Pilipinas will implement two 25-basis-point rate hikes, raising the policy rate to 5.0% by August.

Summary

The Philippines faces a challenging economic environment characterized by slowing growth and accelerating inflation. Monetary policy tightening is expected as the central bank aims to manage rising price pressures while navigating a weaker investment climate.

FAQ

Q: What was the Philippines' GDP growth in Q1 2026?
A: The Philippine economy grew 2.8% year-over-year in Q1 2026, below the 3.3% consensus and slowing from the previous quarter.

Q: What is Bank of America's inflation forecast for the Philippines in 2026?
A: Bank of America expects inflation to average 7.3% for 2026, peaking near 10% in the fourth quarter.

Source: Investing.com