IMF outlook points to a shallow, uneven recovery

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Philstar.com

October 14, 2026 | 3:23pm

From AB Capital's The Opening Bell: Three Moves

Event

The IMF expects Philippine GDP growth to slow to 3.4% in 2026E from 4.4% last year, before recovering to 5.1% in 2027E. It also raised its 2026E unemployment forecast to 5.4% and sees inflation averaging 5.6%, highlighting a weaker growth-inflation mix.

View

We think the 2026E forecast implies only a modest improvement from the weak first half. With GDP growth at 2.6% in 1H26, the economy would need roughly 4% growth in 2H26 to approach the IMF's full-year estimate, making public investment execution and household demand critical.

Catalyst

The main upside would come from faster infrastructure normalization, easing energy prices and improved investor confidence. Risks remain skewed toward delayed public capex, persistent food and fuel inflation, and weaker employment, while the projected 4.8% (of GDP) current account deficit adds another constraint through the PHP and imported inflation.

Action

In our view, the backdrop favors selective exposure to defensives, banks with strong funding and reserve buffers, and companies positioned for an eventual investment recovery. We would remain cautious on highly cyclical consumption and rate-sensitive sectors until fiscal execution improves and inflation shows a more durable decline.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.