Amro stays cautious on PH amid oil shock, trade tensions

MANILA, Philippines — The Asean+3 Macroeconomic Research Office (Amro) said more weakness lies ahead for the Philippine economy this year, though it lowered its inflation forecast and remained cautiously optimistic as the country navigates the fallout from the Middle East conflict and renewed global trade tensions.

In its quarterly outlook, the regional surveillance group kept its 2026 growth forecast for the Philippines at 4.1 percent, which would mark a further slowdown from the economy’s already subdued 4.4-percent expansion in 2025.

READ: IMF, ADB slash PH growth forecast

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Amro, meanwhile, cut its inflation outlook for the Philippines, projecting consumer prices to rise by 5.7 percent this year, down from its previous estimate of 6 percent. The forecast, however, remains well above the government’s 3-percent target. It kept its 2027 inflation forecast unchanged at 4.1 percent.

The country is also projected to keep pace with the wider Plus-3 grouping—Asean members plus China, Hong Kong, Japan and South Korea—this year, before surpassing the group’s expected 4-percent growth next year.

Slowdown

“The Philippines is one of the countries in the region that have been harder hit by the oil shock so far, and that’s reflected in both the lower sort of growth rates we forecast for this year than last year,” said Dong He, chief economist at Amro.

The slowdown was already evident in the first quarter, when the economy expanded just 2.8 percent from a year earlier. Growth was weighed down by the fallout from the Middle East conflict, which hit an economy still recovering from a confidence shock linked to a major corruption scandal.

READ: DBCC cuts PH 2026 growth target to 3.5-4.5%

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He said limited fiscal room prevented the government from deploying more spending to shield households from higher prices, allowing inflationary pressures to quickly spread across key consumer goods. But he said the Bangko Sentral ng Pilipinas moved swiftly to respond, raising interest rates by a cumulative 50 basis points.

Five months into the Gulf conflict, another challenge has emerged: fresh trade uncertainty after the Trump administration announced tariffs of 10 percent and 12.5 percent on imports from 60 trading partners, including the Philippines, over allegations that they failed to adequately enforce bans on goods made with forced labor.

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Looking ahead, Amro’s He said the region is expected to weather the new trade tensions.

“Broadly speaking, I think the region really has adjusted very well to the uncertainties imposed by the US tariffs since the reciprocal tariffs started in April 2025,” he said. INQ