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Philippines economic slowdown and monetary policy response

Updated 1 time since CLSTR started tracking revisions of this situation.

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2026-08-09 19:12 UTC → 2026-08-28 11:14 UTC · added removed

The Philippine economy experienced a slowdown grew by 2.3% in the second quarter of 2026, recording a 2.3% annual growth rate. marking its weakest quarterly expansion in 16 years, excluding the pandemic period. This performance slowdown was driven by a 14.8% contraction in construction and reduced softer household spending, despite a rebound in though the agricultural sector, which grew by 2.9%. Following this weak GDP performance, financial analysts have revised their outlooks for sector rebounded with 2.9% growth. Economic Planning Secretary Arsenio Balisacan attributed part of the slump to a corruption scandal involving flood-control projects. Despite the slowdown, the Bangko Sentral ng Pilipinas. While some economists suggest Pilipinas (BSP) raised its key policy rate by 25 basis points to 5 percent in August. Governor Eli Remolona Jr. noted that while headline inflation eased to 6.2% in July, core inflation remains above the central bank may tolerance range, citing volatile oil prices and potential El Niño impacts as risks. This move follows a period of high inflation, which averaged 4.8% in the first half of 2026. Financial analysts remain divided on future policy. Standard Chartered lowered its 2026 GDP growth forecast to 3.5% and expects the BSP to pause interest hikes, anticipating rate hikes cuts in 2027 once inflation falls below 4%. Pantheon Macroeconomics also suggested a pause to avoid further straining the economy, others while Nomura economists maintain that the rate-hiking cycle will continue throughout continue. Market sentiment has weakened, with the year. Some forecasts also anticipate potential rate cuts in 2027 if inflation trends downward. Philippine Stock Exchange Index falling below the 6,000 level amid concerns over tightening and lowered growth projections.

Versions

  1. 2026-08-28 11:14 UTC Philippines economic slowdown and monetary policy response
  2. 2026-08-09 19:12 UTC Philippines economic slowdown and monetary policy response

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