The ASEAN+3 Macroeconomic Research Office (AMRO) has sharply revised its 2026 economic growth and inflation forecasts for the Philippines, marking the most significant revisions in the region and joining a growing list of international institutions downgrading the country’s outlook amid the global energy shock.

In its June Interim Update of the ASEAN+3 Regional Economic Outlook (AREO), AMRO cut its Philippine gross domestic product (GDP) growth forecast to 4.1 percent from 5.3 percent previously, while raising its inflation projection to 6.0 percent from 3.9 percent.

“Growth revisions are uneven across the region, with forecasts upgraded for most Plus-3 economies on the back of the robust AI-driven technology cycle, while ASEAN growth has been downgraded in some economies, including the Philippines and Vietnam, where stronger inflation passthrough is expected to weigh on domestic demand,” the report said.

The revisions to AMRO’s 2026 Philippine forecasts are the largest in the ASEAN+3 region, underscoring the country’s vulnerability to the global energy shortage. The findings are consistent with earlier assessments by global risk analytics firm BMI, which recently lowered its Philippine GDP growth forecast to 3.9 percent, a downgrade of about 1.3 percentage points, which marked BMI’s largest downward revision for any economy outside the Middle East.

The Philippine economy grew by just 2.8 percent in the first quarter, extending a three quarter slowdown. Government officials largely attributed the weak first quarter numbers to the broader effects of the national energy emergency, with the country importing a majority of its fuel.  

In contrast, AMRO reported that the ASEAN+3 region expanded by a solid 4.4 percent during the same period, noting that the impact of higher fuel prices stemming from the closure of the Strait of Hormuz varies depending on an economy’s dependence on imported oil.

Headline inflation, meanwhile, accelerated to a three-year high of 7.2 percent in April, driven by elevated fuel prices and higher transportation, fertilizer, and food costs. The Bangko Sentral ng Pilipinas (BSP) has likewise raised its full-year inflation forecast to 6.0 percent, matching AMRO’s projection, while warning that the full spillover effects of an oil shock typically take about two quarters to materialize.

The BSP now expects inflation to settle between 7.1 percent and 7.9 percent in May. Inflation has exceeded the central bank’s projections for two consecutive months, with both BMI and the Asian Development Bank noting the speed and severity of the conflict’s impact on the Philippine economy.

AMRO said the outcome of the Middle East conflict remains the “most consequential near-term uncertainty,” noting that the range of possible outcomes is wider than usual.

The organization also revised its 2027 forecasts for the Philippines, lowering its GDP growth projection to 5.5 percent from 5.8 percent previously, while raising its inflation forecast to 4.1 percent from 3.6 percent.