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NOTING SLIGHT improvements in the country’s inflation rate because of easing global oil prices, Nomura Global Markets Research trimmed the country’s inflation for 2026 to 5.1 percent, from its earlier projection of 5.5 percent, although it warned of underlying price pressures to remain persistent.
The Japanese investment bank left its economic growth forecast for the country unchanged at 4.6%, slightly above the 4.4% expansion recorded in 2025, reports said.
Nomura’s research analysts, Euben Paracuelles and Nabila Amani, released a report detailing their updated outlook on the local economy, said despite lower inflation forecast for 2026 it expects the Bangko Sentral ng Pilipinas to raise its benchmark interest rate to 5.25% by year end as core inflation, which excludes volatile food and energy prices, continue to rise due to delayed, second-round effects.
The anticipated 4.6% 2026 GDP growth remains below the government’s official target with several factors weighing on economic activity, including the lingering effects from domestic corruption scandals, continued fiscal tightening, delayed investments, and the global economic impact of Middle East conflicts.
Other financial institutions have differing forecasts for Philippine economic growth. For one the International Monetary Fund downgraded its 2026 growth projection to 3.9%; the Asian Development Bank scaled back its growth forecast to 3.8% and the Development Budget Coordination Committee adjusting the official target range to 3.5 to 4.5%.
“We expect GDP growth to remain weak through the first half of 2026, due to the lingering effects of the corruption scandal, continued fiscal tightening and as weak sentiment is still weighing on private investment spending,” Nomura said.
Nomura is a leading global financial services group founded in Japan in 1925. It operates a worldwide network spanning over 30 countries to provide investment management, wealth management, wholesale (global markets and investment banking), and banking services to individuals, institutions, and governments.
Nomura earlier identified the Philippines as one of Asia’s biggest beneficiaries of the tentative peace agreement between the United States and Iran, estimating that every 10-percent decline in global oil prices could shave about 0.5 percentage point off Philippine inflation—the largest disinflationary impact in the region alongside India.
Still, Nomura cautioned that core inflation—which excludes volatile food and fuel prices—continues to face upward pressure.
“We lowered our CPI inflation forecasts due to our latest oil price assumptions. In terms of the trajectory, we believe headline inflation has already peaked, but core inflation has not, reflecting second-round effects,” Nomura said.
Philippine inflation eased for a second straight month to 6.4 percent in June from 6.8 percent in May, as lower global oil prices helped pull down domestic fuel costs.
Core inflation, however, accelerated to 4.4 percent in June from 4.1 percent a month earlier as businesses continued to pass on higher costs.
It marked the sixth straight month of increases and the highest reading since November 2023 or nearly three years.
Nomura’s 5.1-percent inflation forecast for 2026 remains well above the Bangko Sentral ng Pilipinas’ (BSP) 3-percent target, the Inquirer said.
The investment bank also flagged El Niño as a key upside risk to inflation, warning that the Philippines is among the countries most vulnerable to weather-related disruptions.
“The Philippines and India are most exposed to an El Niño shock, followed by Indonesia and Thailand,” Nomura said.
“The Philippines is particularly vulnerable to higher rice prices: it is a net food importer (2% of GDP), and rice accounts for 8.9% of its CPI basket,” it added.
Further, Nomura said it still expects the BSP to raise its benchmark interest rate by another 50 basis points this year, bringing the policy rate to 5.25 percent.
“It will likely maintain a measured approach. We also continue to expect a very short hiking cycle that is likely to be reversed next year: we forecast 75bp of BSP cuts by H2 2027 to 4.50%,” Nomura said.