The Bangko Sentral ng Pilipinas (BSP) remains cautiously optimistic despite signs of a near-term economic slowdown, viewing the current challenges as temporary hurdles in the country’s growth path.
In an interview with TV5, BSP Governor Eli Remolona Jr. shared that while the Philippine economy may experience slower growth in 2026, a strong rebound is expected in 2027.
“Once we factored in negative business sentiment, we found that growth would slow down in 2026, but recover and more than catch up in 2027,” Remolona explained.
The central bank has revised its GDP growth forecast to 5.3% for 2026, a slight dip from earlier estimates, before expecting a robust recovery of around 6.3% in 2027.
Remolona pointed to a combination of factors weighing on business confidence—including recent disruptions from suspended flood control projects and ongoing investigations into public infrastructure spending. “The scandal and the business sentiment associated with it made it clearer that we needed a rate cut,” he said.
To help steady the economy, the BSP’s Monetary Board recently lowered its benchmark interest rate to 4.75%, the lowest in three years. While another rate cut before year-end remains uncertain, Remolona noted it is “possible” if economic data point to further weakness.
Amid these challenges, Remolona emphasized that the banking system remains resilient. Despite the Anti-Money Laundering Council’s freeze of ₱4.4 billion in assets tied to the flood control scandal, the BSP governor assured that banks are “well-capitalized” and liquid.
“We still have a lot of capital and liquidity in the banks,” he said. “There’s no sign or risk of an imminent crisis.”
