Philippine Economy Faces Stagflation Test as Q1 GDP, Inflation Data Loom

The Philippine economy teeters on the edge of stagflation this week as critical first-quarter GDP and April inflation figures threaten to confirm fears of sluggish growth amid spiraling prices.

Economists forecast Q1 GDP growth at just 3.4%, a marginal improvement from 3% in late 2025 but well short of the Marcos administration’s 5-6% target, extending a streak of missed goals since 2023. The Philippine Statistics Authority releases the data on Thursday, May 7, capping a data-heavy week that includes Monday’s S&P Global manufacturing PMI, Tuesday’s consumer price index, and Wednesday’s labor force survey.

Inflation pressures intensified in April, with the Bangko Sentral ng Pilipinas (BSP) expecting a jump to 5.6-6.4% — the fastest since 2023 and above the 2-4% target. March’s 4.1% rate, up from February’s 2.4%, was fueled by Middle East tensions, which drove gasoline inflation to 27.3% and diesel to 59.5%. The BSP hiked rates to 4.5% last month and now projects full-year inflation at 6.3%, prompting warnings of two more hikes to 5%.

University of Asia and the Pacific economists slashed their Q1 estimate to 3.1%, citing oil at $100/barrel due to the Iran conflict. The Asian Development Bank trimmed 2026 growth to 4.4%, below the regional average, while Development Secretary Arsenio Balisacan admitted sub-5% growth is likely.

Markets are jittery. The PSEi dipped below 6,000 to 5,833.64 last Friday amid foreign outflows, a record-weak peso at 61.567:US$, and rate fears. Philstocks’ Japhet Tantiangco sees a “downward bias” but calls current levels a bargain, urging caution.

HSBC warns a Strait of Hormuz blockade could sink growth below 4%. Investors eye BSP signals for relief amid global headwinds.