Phl to shift to more sustainable growth

The Philippines has largely won the fight to tame inflation. Now comes the harder task - turning restored policy credibility into durable growth.

- By KEISHA TA-ASAN

Roces Neri

As inflation settles within the Bangko Sentral ng Pilipinas (BSP)'s target range and financial buffers remain intact, the Organization for Economic Cooperation and Development (OECD) said the country has an opportunity to shift from stabilization mode to a more sustainable expansion.

In its latest assessment, the OECD said economic activity is expected to gradually strengthen as price pressures ease and domestic demand improves, giving policymakers room to recalibrate support measures while safeguarding macroeconomic and financial stability.

"As growth returns to trend, fiscal policy should remain prudent to prepare for future shocks and rising expenditure pressures, including from infrastructure investment, social protection and the climate transition," it said.

Inflation has moderated significantly from its recent peaks and is projected to remain within the two to four percent target band of the BSP.

The easing of price pressures, the OECD noted, should help restore household purchasing power and support consumption, which continues to anchor the economy.

Growth, however, has been uneven. While the Philippines remains among the faster-growing economies in the region, recent quarters have reflected softer momentum amid external headwinds and tighter financial conditions.

The country's gross domestic product (GDP) grew by just three percent in the fourth quarter of 2025, the lowest level since 2011 excluding the pandemic, bringing average expansion to 4.4 percent for the full-year.

The Paris-based body expects Philippine GDP to grow by 5.1 percent this year, before picking up to 5.8 percent in 2027. "Investment will recover over 2026 to 2027 as public investment normalizes and borrowing costs decline," the OECD said.