PHILIPPINE economic growth likely remained muted in the first quarter, weighed down by the lingering fallout from the flood control scandal and rising costs drivenPHILIPPINE economic growth likely remained muted in the first quarter, weighed down by the lingering fallout from the flood control scandal and rising costs driven

Q1 growth likely still weak amid flood mess fallout, rising inflation

2026/05/05 00:33
3 min di lettura
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PHILIPPINE economic growth likely remained muted in the first quarter, weighed down by the lingering fallout from the flood control scandal and rising costs driven by the oil crisis, analysts said.

In a report dated May 1, Nomura Global Markets Research said gross domestic product (GDP) may have expanded by 2.9% in the January-March period, slowing from 3% in the previous quarter and 5.4% in the same period last year.

“We expect GDP growth to moderate further to 2.9% year on year in Q1 from 3% in Q4, still led by a slump in construction activity due to the corruption controversy,” it said.

In 2025, the Philippine economy grew by 4.4% — a post-pandemic low — as a flood control scandal curtailed government spending, hurt consumption, and dampened business and consumer confidence.

“We also expect private sector spending to remain subdued, particularly household consumption, weighed by weak sentiment and rising costs,” Nomura said.

On the other hand, analysts from Deutsche Bank Research forecast first-quarter GDP to expand by 3.3%, slightly better than the 3% growth in the fourth quarter.

“While we expect some recovery in household consumption in the quarter, aggregate growth could be weighed down by high base effects from a frontloading of government spending in Q1 last year (+18.7% year on year) before the May 2025 midterm elections,” they said in a note released on Monday.

A BusinessWorld poll of 21 economists and analysts conducted last week yielded a median estimate of 3.4% for the first-quarter GDP, well below the government’s 5%-6% target for the year.

The Philippine Statistics Authority (PSA) will release the first-quarter GDP report on Thursday.

HOT INFLATION
Meanwhile, prolonged oil price shocks may have continued to stoke inflation in April, with the headline print likely accelerating to its fastest pace in three years.

Nomura analysts said headline inflation may have quickened to 6.2% in April from 4.1% in March and 1.4% in April 2025. This would bring inflation to its fastest since the 6.6% recorded in April 2023.

Fluctuating global oil prices amid uncertainties surrounding the Middle East war kept domestic fuel prices high in April. However, several local fuel retailers began to roll back fuel prices in the week of April 14.

Last month, pump price adjustments stood at a net decrease of P0.58 per liter for gasoline, P28.18 per liter for diesel and P17.71 per liter for kerosene.

Nomura likewise sees broader spillover effects heating up core inflation to 3.7% in April from 3.2% in March.

The Bangko Sentral ng Pilipinas (BSP) has said second-round price effects from the war emerged earlier than expected, prompting caution over the core inflation print.

The BSP noted that the recent uptick in energy inflation has begun to spill over to the costs of fertilizer, transport and food.

On the other hand, Deutsche Bank Research sees the headline clip coming in at 5.5%, the fastest since the 6.1% in September 2023.

“(The) Philippines (5.5%) and Thailand (1.5%) could see the largest increase in inflation by ~1.5%-point each, the former of which would be meaningfully above BSP’s 2-4% inflation target, but well-within BoT’s (Bank of Thailand) 1-3%,” it said.

Based on a BusinessWorld poll of 17 analysts, the consumer price index in April is estimated to be at 5.5%, slightly below the BSP’s 5.6%-6.4% forecast for the month.

The PSA is set to publish the April inflation data on Tuesday. — Katherine K. Chan

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