AMRO tells PH; local economists agree
Think tank ASEAN+3 Macroeconomic Research Office (AMRO) urged the Philippines to refine its growth strategy, investing more effectively in a sustainable future braced against climate shocks and equipped with an upskilled workforce for the age of artificial intelligence (AI).
As a result of its recent annual consultation visit to Manila this month, AMRO said strong domestic consumption and a stable labor market continues to drive economic growth, while inflation has eased below the Bangko Sentral ng Pilipinas (BSP) target range.
The think tank, however, warned in its statement issued on Friday that the central bank should proceed cautiously with further rate cuts, given the near-zero output gap and potential supply shocks.
Local analysts agreed with AMRO’s call.
Sound banking sector
AMRO noted fiscal consolidation is progressing, albeit more slowly than planned, as the government prioritizes infrastructure and human capital investment. The banking sector remains sound with low non-performing loans and ample liquidity.
“While near-term growth remains steady, the outlook is clouded by external uncertainties,” AMRO said, citing US protectionist policies, slower growth in key trading partners, tighter global financial conditions and possible renewed inflation.
Structural constraints such as pandemic scarring, weak infrastructure, and limited manufacturing also weigh on the economy’s long-term potential, its said.
AMRO projected Philippine GDP growth at 5.6 percent in 2025 and 5.5 percent in 2026, supported mainly by consumption.
Its inflation forecast aligns with that of the BSP.
“Inflation is seen rising from 1.8 percent in 2025 to 3.2 percent in 2026, still within the BSP’s target band, as easing food and commodity prices offset strong demand,” the BSP said in August after reducing its Target Reverse Repurchase (RRP) Rate by 25 basis points to 5 percent.
The BSP has set a target band for inflation at 2 to 4 percent.
For resilience, AMRO recommended streamlining spending targets with measurable performance frameworks, accelerating fiscal consolidation, strengthening monetary policy transmission, and bolstering competitiveness.
It also pressed for policies to integrate AI, including sectoral upgrading, business climate reforms, and labor upskilling.
PH economists echo AMRO’s call
Rizal Commercial Banking Corp. chief economist Michael Ricafort said over the weekend refining the investment-growth mix is timely, as the peso’s swings and US trade tensions highlight the need for stronger domestic competitiveness.
UnionBank chief economist Ruben Carlo Asuncion added that aligning fiscal priorities with infrastructure and skills development is “critical if the Philippines is to sustain growth beyond consumption.”
