The Philippines saw mixed economic signals in 2025, with exports holding up but domestic growth coming under pressure, according to ING’s Asia Outlook 2026 report.
Household consumption remained weak, retail sales growth softened and wage increases moderated amid rising labor force participation.
The country was noted as lagging behind export and tech-driven Asian economies like Taiwan and Singapore, which exceeded forecasts, while domestically-driven nations such as the Philippines and India lagged.
ING expects broader US tariffs, averaging 19 percent on many Philippine goods, to limit trade performance in 2026, despite recent US tariff rollbacks on roughly 200 food items providing short-term relief for agricultural exporters.
Domestic challenges also weighed on growth, including governance-related investigations that dampened business sentiment and slower public infrastructure spending in the third quarter, the report noted.
Structural hurdles persist, with the software and Business Process Outsourcing (BPO) sector, concentrated in voice-based services, vulnerable to Artificial Intelligence (AI) automation. The Philippines also lags regional peers in attracting manufacturing foreign direct investment.
ING noted the administration’s strong anti-corruption stance as a longer-term positive.
“As long as confidence returns and public investment picks up later, these efforts should ultimately support a more sustainable growth path,” said ING chief economist and regional head of research for Asia-Pacific Deepali Bhargava.
Inflation fell sharply across Asia in 2025 and is expected to rise only modestly in 2026, allowing central banks, including the Philippines’, to continue rate cuts.
ING cautioned that lower-than-expected inflation could raise real interest rates, affecting investment and consumer demand.
Commodity markets are projected to remain benign, with Brent crude averaging P57 per barrel and grain prices stable.
