Manila: Lower growth forecasts by multilateral agencies for the Philippine economy in 2026 were partly attributed to the negative close of both the Philippine Stock Exchange index (PSEi) and the peso on Thursday.
According to Philippines News Agency, the International Monetary Fund (IMF) slashed its growth forecast for the domestic economy from 4.1 percent to 3.9 percent due to the impact of the Middle East crisis on prices and activities. The Asian Development Bank (ADB) also reduced its forecast from 4.4 percent to 3.8 percent, citing delayed investments, softer private consumption amid higher commodity prices, and climate-related risks.
This cautious outlook influenced investor behavior, leading to a 0.83 percent slide in the PSEi to 6,223.87 points, and a 1.02 percent decline in the broader All Shares index to 3,370.56 points. Most sectoral gauges followed the main index's downward trend, except for Services, which saw a 0.85 percent increase.
Financials experienced the most significant drop among sectoral indices, falling by 2.14 percent. This was followed by Holding Firms at 2.06 percent, Industrial at 1.44 percent, Mining and Oil at 1.39 percent, and Property at 1.31 percent. Trading volume reached 1.49 billion shares, with a total value of PHP6.2 billion. Decliners outnumbered advancers 111 to 68, while 62 shares remained unchanged.
The peso also weakened against the US dollar, closing the day at 61.60 compared to the previous close of 61.50. It opened at 61.61, depreciating from the 61.55 opening level in the previous session. The local currency traded between 61.64 and 61.53, averaging at 61.58. Trading volume increased to USD1.26 billion from USD1.16 billion the day before.
Rizal Commercial Banking Corporation's chief economist, Michael Ricafort, noted that the IMF and ADB's downward revisions of growth forecasts tempered investor sentiment. Additionally, the latest clashes in the Middle East have contributed to rising crude oil prices, marking the third consecutive trading day of increases, reaching a two-week high of nearly USD79 per barrel compared to USD76 per barrel in the previous session.
Despite the peso's depreciation, Ricafort highlighted its stability against the greenback, attributing this to potential interventions aimed at smoothing market volatility at the 61.60-61.70 levels. He also pointed to expectations of possible future rate hikes by the Bangko Sentral ng Pilipinas (BSP) at the next rate-setting meeting on August 27, 2026, as a positive factor for stabilizing the peso exchange rate, importation costs, and managing inflation expectations.
Ricafort anticipates the local currency to trade between 61.50 and 61.70 levels against the US dollar on Friday.
