By the staff
The economy is expected to recover in the second half of 2026 after a slowdown driven by weaker government infrastructure spending and dented investor confidence from recent corruption concerns, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said Tuesday.
GDP growth is projected at 4.5 percent for 2025, falling short of the Development Budget Coordination Committee’s 5.5–6.5 percent target, after third-quarter expansion slowed to 4 percent from 5.49 percent in the previous quarter. Growth for the first nine months of the year averaged 5 percent.
Remolona said the economy could expand 5.4 percent in 2026 and potentially accelerate to 6.2 percent as investor confidence returns. “This is an opportunity, I think, to reform the system,” he said, referring to government efforts to prosecute corruption cases and implement systemic reforms.
Among the initiatives cited are simplifying the tax system to reduce reassessments by the Bureau of Internal Revenue and maintaining the country’s tax effort at 15 percent of GDP.
The central bank chief also flagged the resilience of the banking system, noting it remains well-funded to support domestic activity.
On monetary policy, Remolona indicated the BSP is approaching the end of its easing cycle, with no rate hikes expected. “We’re very close to where we want to be in terms of the policy rates. For now, it’s either we don’t move or we cut,” he said.
He added that a final policy rate cut is possible this year, depending on incoming data, particularly if growth underperforms projections.
