Economist bets on 2027 rebound
Describing the current slowdown as cyclical rather than structural, Balbieran argued that the economy’s long-term foundations remain intact; he pointed to factors including an anticipated infrastructure spending recovery, easing oil prices, the prospect of lower interest rates and increased activity ahead of the 2028 elections that could support economic growth in 2027.
The Philippine economy could rebound in 2027 after a difficult year marked by elevated oil prices, weaker construction activity and declining business confidence, according to an economic assessment presented by economist Ronilo Balbieran.
Economic foundations intact
In his presentation, From Setback to Springboard: Seizing the 2027 Great Rebound for Lasting Impact, delivered at a recent Rotary Club of Makati dinner meeting, Balbieran described the current slowdown as cyclical rather than structural, arguing that the economy’s long-term foundations remain intact.
The assessment cited second-quarter gross domestic product growth of 2.3 percent in 2026, the weakest quarterly expansion since 2009 outside the pandemic period.
Government construction contracted by 32.4 percent, which Balbieran attributed to a corruption-related cleanup that disrupted public infrastructure activity.
The presentation also pointed to higher oil prices linked to the Middle East conflict as another source of economic pressure.
Despite the slowdown, forecasts cited in the presentation point to faster growth next year. The International Monetary Fund projected 5.1 percent growth in 2027, while the World Bank and Asian Development Bank forecast 5.2 percent and 5.1 percent, respectively. The ASEAN+3 Macroeconomic Research Office projected 4.8 percent, while S&P Global Ratings forecast 5.4 percent.
The Development Budget Coordination Committee’s official growth target for 2027 stood at 5 percent to 6 percent.
Balbieran identified the anticipated recovery of infrastructure spending, easing oil prices, the prospect of lower interest rates and increased activity ahead of the 2028 elections as factors that could support growth.
Reforms introduced since 2021
He also cited reforms introduced since 2021, including changes involving telecommunications, railways, airports, shipping, retail, taxation, investment incentives, e-commerce, public-private partnerships and government procurement, as structural foundations that could help sustain economic activity.
However, the economist cautioned that available capital does not automatically translate into investment when businesses remain uncertain about inflation, interest rates and the timing of public infrastructure spending.
The presentation noted that banks have substantial funds available and that overseas Filipino remittances benefit from the weaker peso.
But uncertainty continues to weigh on decisions to invest and expand.
For businesses, Balbieran recommended preparing for the expected recovery instead of basing decisions solely on current weakness. His proposed strategies included expanding capacity while costs remain favorable, incorporating volatility into business plans, pursuing opportunities across the Association of Southeast Asian Nations and strengthening trust with customers and partners.
He also stressed that economic recovery should be measured by its impact on households, not just headline growth figures.