During the first Economic Forum organized by the German-Philippine Chamber of Commerce and Industry (GPCCI) at the German Club Manila last January 22, 2026, Mr. Rafael Garchitorena of Regis Partners presented an insightful yet cautiously optimistic outlook for the Philippine economy and equity markets. The event, “Charting the Year 2026: Key Trends Shaping the Philippine Economy”, highlighted the paradox facing investors, discounted valuations and early signs of recovery, set against persistent political and financial challenges.
Mr. Garchitorena stated that, the Philippine Stock Exchange Index (PSEi) had rebounded from its November 2025 low levels to levels last seen before the pandemic. Foreign investors, who were largely absent in 2025, returned strongly in January, reflecting a broader inflow into emerging Asia. However, he noted that history shows strong starts often fade, with past years ending weaker than they began.
On the macro front, economic growth in 2025 slowed, marking the weakest performance since 2011 outside of COVID years. The slowdown was attributed to the “Flood Control” corruption scandal, which dampened government spending and led to a decline in public construction, alongside storm‑disrupted consumption. Infrastructure spending has already been hit hard, having been reallocated away from public works toward social programs.
Corporate earnings were uneven, with overall net profit growth of just 2% across covered sectors. Looking ahead, GDP growth is forecast to recover modestly in 2026, supported by easing inflation and expected BSP rate cuts, although fiscal and current account deficits are expected to remain a drag on the peso, contributing to its continued weakness, noted by Mr. Garchitorena.
Political risk remains a recurring concern, as the trust of the Filipino people in the current administration has dwindled. Mr. Garchitorena suggested that the base case is “muddling through” until the 2028 elections. Despite these headwinds, Mr. Garchitorena pointed to areas of resilience. Remittances grew in 2025, continuing their historic stability through periods of crisis. Consumer loans surged year‑on‑year, with continued growth in credit card usage, while non‑performing loans remained stable. Rice prices fell sharply, delivering relief to low‑income households where food accounts for the majority of spending. Auto sales and electricity demand showed mixed signals, but overall consumer activity remained firm.
In concluding his presentation, Mr. Garchitorena reminded attendees of past recoveries: markets rebounded strongly after the Estrada ouster in 2001, the Global Financial Crisis in 2008, and the PDAF scandal in 2013. With valuations at multi‑decade lows, the Philippines may again be poised for a rebound. The critical question, he emphasized, is whether a credible catalyst, be it reforms, infrastructure revival, or stronger consumption, will emerge to sustain momentum in 2026 and the years that follow.
We extend our sincere appreciation to the audience for their thoughtful questions and active participation, which enriched the discussion. We also gratefully acknowledge the support of our Premium Partners: Döhle Shipmanagement Phils Corp, Learn German PH, and PPI Pazifik Power Inc for attending the first Economic Forum of the year.
