Philippines Monthly Economic Developments (January 2026)

Overview & Synopsis

Domestic economic activity softened in November 2025 as manufacturing and employment indicators weakened. Merchandise exports strengthened on the back of robust shipments of electronics, while imports declined due to lower demand for select food products. The holiday season likely lifted activity in December, though consumer and business sentiment indicate that the pick-up was relatively muted. Inflation fell below its target range in 2025, allowing the central bank to make its fifth interest rate cut for the year on December 11th. Slower infrastructure disbursements continued to weigh on public spending while declining non-tax revenues widened the fiscal deficit as of November. The government signed the 2026 Budget, signaling an increased focus on human capital investment. Allocations for education and health were increased by an equivalent of 1.2 percentage points of gross domestic product (GDP). Early data in 2026 paint an uncertain outlook, with investor and consumer confidence still fragile. The exchange rate depreciated in early January, but a reversal of earlier selloffs supported the stock market. The government is advancing trade deals, starting with a free trade agreement with the United Arab Emirates.