Manila: The Philippines is expected to continue to post stable growth this year and in 2026 mainly driven by consumer spending, the Organization for Economic Cooperation and Development (OECD) said. OECD head of Indonesia and Philippines desk Cyrille Schwellnus stated that the organization projects the Philippine economic growth to hit 5.6 percent this year and accelerate to 6 percent in 2026.
According to Philippines News Agency, Schwellnus mentioned in a virtual briefing that the growth momentum in the Philippines is expected to remain broadly stable, with consumer spending as the main driver of growth, similar to trends observed in Indonesia and other Southeast Asian countries. The continued growth in consumer spending is supported by a robust labor market as unemployment has remained below 4 percent over the past months.
He also highlighted that government spending grew, particularly in the first quarter of this year, boosted by the midterm elections. While exports have managed to grow in recent months, Schwellnus warned that the OECD projects growth in this sector to weaken due to escalating global trade tensions. However, he noted that the Philippines is less exposed to a slowdown in global trade compared to other Southeast Asian economies, as its growth is mainly driven by domestic demand.
The OECD expects headline inflation to remain within the government's target this year, allowing the Bangko Sentral ng Pilipinas (BSP) to further ease policy rates. Inflation is projected to remain contained at 2 percent in 2025 and 3.1 percent in 2026 amid balanced domestic demand and currency stability.
Schwellnus emphasized the need for continued policy reforms to boost productivity and overall growth. He identified two critical areas: barriers to entry and competition, particularly in electricity and telecommunications, and non-wage labor costs. Lower electricity rates could help reduce costs for businesses and consumers while encouraging private sector investment. Additionally, adjustments in employment regulations could make it easier for businesses to create formal jobs, thus expanding opportunities for workers and strengthening the foundations of economic growth.
