By Katherine K. Chan, Reporter
THE PHILIPPINE ECONOMY is on the right track to bounce back this 12 months as business confidence has begun to enhance, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. said.
“It looks prefer it’s (confidence) starting to return back,” the central bank chief said during a Management Association of the Philippines (MAP) event on Wednesday held in Taguig City. “Not as fast as we would really like, however it’s coming back.”
“In our projections, we predict that we’ll be back to normal by the second half of 2026,” he added.
Mr. Remolona noted that the lack of confidence amid the graft scandal stalled the country’s economic growth within the second half of 2025.
Within the fourth quarter of 2025, the Philippine gross domestic product (GDP) grew by 3%, its slowest in 14 years (excluding the pandemic), as investments and spending slowed amid the flood control controversy.
This brought full-year economic growth to a post-pandemic low of 4.4%, undershooting the BSP’s 4.6% forecast and the federal government’s 5.5%-6.5% goal.
Nevertheless, recent indicators, corresponding to the S&P Global Manufacturing Purchasing Managers’ Index (PMI) and the Philippine Stock Exchange index (PSEi), have signaled that business confidence is slowly returning and the economy could also be on the solution to recovery.
Latest data showed that the Philippines’ manufacturing PMI rose to a nine-month high of 52.9 in January from 50.2 in December.
The PSEi rose to a near seven-month high on Wednesday, even soaring above the 6,500 line through the session. The PSEi went up by 0.37% or 24.22 points to shut at 6,498.82, its best finish in almost seven months or because it closed at 6,525.04 on July 14, 2025.
For 2026, the central bank projects GDP to expand by 5.4%.
Nevertheless, Mr. Remolona said they’re reviewing a possible revision to their growth forecast.
Talking to reporters on the sidelines of the MAP event, Mr. Remolona said the revival of confidence, alongside inflation falling back to focus on, can have narrowed the central bank’s easing space.
Asked if the BSP can still afford to chop rates anew to support the economy, Mr. Remolona said: “It’s conceivable. Again, it’s based on the information. We’ve got to review the information.”
The benchmark rate of interest currently stands at 4.5%, the bottom in over three years.
The Monetary Board has thus far delivered 200 basis points (bps) in cuts because it began its easing cycle in August 2024, including five straight 25-bp reductions last 12 months.
Mr. Remolona noted that stabilizing inflation stays their priority in deciding on the monetary policy path.
“If we will maintain price stability, that may help with confidence,” he said.
In January, headline inflation got here in at 2%, marking its comeback to the BSP’s 2%-4% goal for the primary time in nearly a 12 months.
INFLATION
Meanwhile, BSP Deputy Governor Zeno Ronald R. Abenoja said headline inflation may approach the three% mark in the approaching months before potentially breaching it by the second half of the 12 months.
“In the event you have a look at the inflation path in our MPR (monetary policy report), it should move regularly close to three% after which possibly slightly above 3% by (the) second half,” he told reporters on the sidelines of the identical event. “But after that, it should move closer to three% again and then stabilize around that area.”
Mr. Remolona noted that he doesn’t mind inflation undershooting their goal but said that an above-3% print worries him more.
The BSP expects headline inflation to average 3.2% by yearend, before easing to three% in 2027.