Stagflation Warning: HSBC Cuts PH Growth, Sees 6.6% Inflation
HSBC cut its Philippine growth forecast to 3.4% for 2026 and raised its inflation outlook to 6.6%, warning that stagflation risks are taking shape.
HSBC Global Investment Research is sounding a sharper alarm on the Philippine economy, cutting its growth forecasts while raising inflation expectations as weak output, joblessness, and price pressure hit at the same time.
According to The Philippine Star, HSBC senior ASEAN economist Aris Dacanay now expects the Philippine economy to grow by only 3.4% in 2026, down from the bank’s earlier 4.6% forecast. Its 2027 growth outlook was also lowered to 4.6% from 5.3%.
The bank also raised its inflation forecast to 6.6% for 2026 from 4%, well above the Bangko Sentral ng Pilipinas’ 2% to 4% target range. For 2027, HSBC expects inflation to stay elevated at 4.4%, up from its previous 3.2% estimate.
Dacanay said “stagflation risks” are becoming apparent after an eventful April marked by faster-than-expected inflation, disappointing economic growth, and a more hawkish BSP. The economy grew only 2.8% in the first quarter, the slowest pace since 2009 outside the pandemic, while April inflation jumped to 7.2%.
HSBC warned that the energy shock could turn into a broader food shock, with disruptions in the Strait of Hormuz affecting oil and fertilizer flows while El Niño threatens farm output. The bank now expects the BSP to raise rates aggressively, possibly bringing the policy rate to 6% by year-end. Source: The Philippine Star
