S&P Global Ratings has lowered its Philippine growth forecast for 2026, citing risks from the Middle East conflict and rising oil prices.
In its midyear Asia‑Pacific banking outlook, the credit rater cut the country’s real GDP growth projection to 4.1%, down 1.7 percentage points from its earlier estimate. The figure is in line with the government’s downgraded target of 3.5% to 4.5% this year.
Growth is expected to rebound to 5.8% in 2027, 6.2% in 2028 and 6.1% in 2029.
“Asia‑Pacific banks remain in reasonably good shape,” S&P said, noting that 92% of ratings carry a stable outlook. But it warned the Middle East war is the region’s “biggest risk.” Credit losses across Asia‑Pacific banks could rise by an additional $180 billion in 2026 and 2027 if tensions persist or escalate.
The Philippines was listed among economies exposed to imported crude. “Rising energy prices could fuel inflation, weaken corporate margins and hurt household borrowers,” S&P said.
It also flagged U.S. trade and policy volatility and weaker sentiment as risks that could lift nonperforming assets and credit losses.
Despite these pressures, the Philippines retained a stable banking risk profile in S&P’s Banking Industry Country Risk Assessment, placed in BICRA group 5 alongside India and Macao.
“Most Asia‑Pacific banks have enough buffers to absorb pressures from the conflict at current rating levels,” the report said.
S&P also pointed to nonfinancial risks, highlighting “AI‑enabled cyber threats” as banks boost spending on risk management and technology defenses.
