Unicapital Securities Inc. expects the Philippine economy to expand at a faster pace in 2026 following a sluggish 4.4-percent performance last year, citing a projected recovery in public infrastructure spending and attractive stock market valuations.
“For 2026, we project GDP growth of 5.2 percent, within the government’s 5 percent to 6 percent target, assuming timely execution of public projects and clearer signals of governance and policy support,” Unicapital Economics Research said in its latest report.
The brokerage firm s while near-term growth remains constrained by weak investment, a sustained rebound in public infrastructure could stabilize the economy and provide a modest upside in the coming quarters.
The Philippine stock market is also expected to recover as the brokerage believes current prices already reflect the recent economic slowdown. The Philippine Stock Exchange index (PSEi) is currently trading at 9.7 times price-to-earnings, which is nearly 40 percent below its 10-year historical average, it said.
Unicapital Securities analysts said this presents a strategic opportunity for investors to capitalize on deep valuation discounts.
They noted that a combination of accommodative monetary policy and stable inflation should support a market re-rating, particularly for infrastructure-linked and rate-sensitive sectors like utilities and real estate investment trusts.
The 2026 outlook follows a disappointing 2025 where GDP growth of 4.4 percent fell short of the government target of 5.5 percent to 6.5 percent. The slowdown was exacerbated by a 3.0 percent expansion in the fourth quarter of 2025, down from 3.9 percent in the previous quarter.
A primary drag on the 2025 performance was a sharp pullback in public construction, which plummeted 42 percent in the fourth quarter and 18 percent for the full year. Thje decline was linked to a corruption probe into flood-control projects and weather-related disruptions in the agriculture sector.
The Philippine Statistics Authority (PSA) reported that the slump in construction shaved 1.1 percentage points off the total GDP growth. Officials said the economy could have expanded by 5.5 percent if construction activity had simply remained flat.
While agriculture managed to reverse a 2024 decline by growing 3.1 percent last year, the industrial and service sectors both experienced significant decelerations.
Industry growth slowed to 1.5 percent from 5.6 percent, while the services sector cooled to 5.9 percent from 6.7 percent in the prior year.
