towards Katherine K. Chan
The Philippine economy is possible Clear the target this year to use the cuts and the sentiments of the weak payment investor due to the scandal of the links, increase the chances of reducing the reduction this month, Bangko Sentral ng Pilipinas (BSP) governor Eli M. Remolana, jr. said.
Speaking to reporters at the head of the BSPefIce in Manila, Mr Remolona said Gross Domestic Product (GDP) growth could remain between 4% and 5% for writing, below the government’s target of 5.5-6.5%.
Asked if this raises the issue of the measure decided in its Dece D. 11 meeting, Mr. Remolona said: “Yes, definitely. But it is not confirmed.”
The BSP in October lowered the Benchmark interest rate by 25 basis points (BPs) for the fourth time in a row, bringing the cost of borrowing to an annual low of 4.75%. It has even introduced a total of 175 BPS in cuts since its start of circulation in August 2024.
The Philippine Economic Outlook is mired in corruption scandals involving shameful government projects. This has reduced government spending, hurt investor confidence, and dampened consumer sentiment and activity.
Mr Remolona said that GDP growth is expected to be reduced this year by the middle of next year. A full recovery is possible by 2027, he added.
“One reason is part of the decline in 2025 is because the government also decides to use it to review flood control projects and other projects. But what does it mean to have a big reason.
Earlier this week, economic secretary Arsenio M. Balisacan admitted that this year’s growth target was not met, after weaker-than-expected growth for the third consecutive year.
In the third quarter, the Philippine economy grew by 4%, the slowest in four years. This brought the nine-month GDP estimate to 5%.
Cutting of rrr
At the time, Mr Remolona said that to reduce the banks’ Debt savings (RRR) is unlikely to increase economic growth.
“It’s already very low, so further cuts aren’t going to do that much,” he said. “So, when you go from 5% to 5%, say, 2%, it’s not a lot of time when it comes to storage demand.”
The BSP governor noted that while they are looking at further reductions in the RRR, the timing is uncertain amid extreme volatility in the financial system.
“I did not commit to the time. Currently, we still have a lot of nothing in the system. The cutting of the last demand will add to that reduction,” said Mr. Remolona.
In February, the BSPs cut Universal and Commerce banks and non-Quasi financial institutions for Quasi-Banking activities’ RRR by 5 BPs to 5%. Digital Banks’ RRR was reduced by 150 BPS to 2.5%, while thrift Banks’ RRR was reduced by 100 bps to 0%. The RRR cut came into effect the week of March 28.
On the other hand, Mr Remolona said that the peso has recently gained strength amid the low expectations of the US Federal Reserve.
“We had a recovery in the peso, partly because the Fed is expected to cut rates on December 10thand for other reasons,” he said.
The Fed has already reduced its key policy rate by 150 bps from September 2024, bringing it to a range of 3.75-4%.
It had its last meeting this year on December 10, the day before the BSP’s last policy meeting this year.
Slow growth
Meanwhile, Nombora Global Markets research sees the economy expanding by 5.3% in 2026, down from its previous record of 5.6%.
“We cut our 1226 growth forecast for 2026 to 5.3% from 5.6%, which is very modest from 4.7% in 2025, despite the basic results of the Asia Macro Outlook 2026 released on Wednesday. “We believe that the ‘bad situation’ continues to play in terms of the impact on the growth of the scandal that continues with a sharp decline in public sector spending.”
Nomura said the damaging growth could prompt the Central Bank to deliver deeper rate cuts until next year to the lethal 4% channel.
In its report, Nomura said the Philippines could secure a credit rating upgrade from S & P Global Racings if it ensures continuous improvement in the corruption control flood.
If achieved, the country’s debt ratio will be just a notch lower than the government’s national government grade target.
“On credit ratings, we expect … A one-notch upgrade in the S & P in the Philippines, considering the decision of the bullet to connect does not delay,” it said.
The previous S&P Global Ratings maintained its long-term rating of “BBB+” and short-term rating of “A-2” and its “positive” outlook for the Philippines.
The credit rater noted that the economic downturn due to the flood control fiasco is likely to be temporary.
“This means that S & P may have to wait another year and, with uncertainty remains high: If the solution to the restoration of corruption is somehow accessible that” a- “happens in Outlook)
However, Mr Remolona noted that S & P’s recent confirmation of the country’s debt rating could help to regain market confidence and stimulate the economy.
“The stock market is back, so that’s kind of a sign that confidence is coming back. S & P Reafferved our positive outlook, which means we’ve tracked the improvement in our ratings,” he said. “Therefore, the signs suggest that confidence is returning.”
