PHL growth forecast retained at 5.5% — BofA

BANK OF AMERICA (BofA) Global Research kept its forecast for Philippine growth unchanged at 5.5%, judging it to be the second fastest-growing economy in Southeast Asia until 2027 because of its lower exposure to US tariffs.

BofA Global Research’s growth estimate, contained in its mid-year review, was unchanged from its April forecast. If borne out, the forecast would come in at the low end of the government’s official target of 5.5% to 6.5%.

For 2026, it expects Philippine GDP to grow 5.6%, also unchanged from the April forecast but lower than the 5.8% projection it issued in November.

BofA also expects the Philippines to grow 5.5% in 2027.

The economy grew by a weaker-than-expected 5.4% in the first quarter, against 5.9% expansion a year earlier.

“We maintain our 2025-26 GDP growth forecast for the Philippines, which is better shielded from US tariff impact to begin with, as its economy is largely domestic-oriented and proposed reciprocal tariff rate is relatively lower,” it said.

The Philippines was assigned a 17% tariff rate in early April, the second lowest in Southeast Asia. The US reciprocal tariffs were suspended until July 9 pending negotiations with trading partners, until which the US charges most imports the baseline 10% rate.

BofA also noted that in the region, the Indonesia has the most advanced negotiations with the US.

Secretary Frederick D. Go, the special assistant to the President for investment and economic affairs and a member of the tariff negotiating mission in dispatched to Washington in May, said negotiations with the US are ongoing, without giving details.

BofA said it expects inflation to remain weak after it decelerated to six-year lows in recent months, due to lower rice, fuel and transport costs.

“We expect inflation to remain weak given the lack of inflationary pressure, and especially if oil prices remain weak, which can open up more room for BSP to reduce rates in coming months,” it said.

The bank said the Bangko Sentral ng Pilipinas (BSP) is expected to bring the policy rate to 5%, even if the Federal Reserve stays hold steady for some time.

“A dovish BSP and a wider trade and current account deficit may translate to a weaker peso, despite a weak dollar,” it said.

The central bank delivered a second straight 25-basis-point (bp) cut, bringing its policy rate to 5.25%, while BSP Governor Eli M. Remolona, Jr. also signaled that the monetary authorities could deliver one more 25-bp cut this year. — Aubrey Rose A. Inosante