[L-R] Mr. Dennis D. Lapid, Officer-in-Charge of the Monetary Policy Sub-Sector at the Bangko Sentral ng Pilipinas; Ms. Wendy Estacio-Cruz, Head of Research at Unicapital Securities, Inc.; Ms. Jemimah Ryla R. Alfonso, Equity Research Analyst, Unicapital Securities, Inc.; and Mr. Peter Louise D. Garnace, Equity Research Analyst, Unicapital Securities, Inc. at Unicapital’s 2026 Start-of-Year Outlook: When The Dust Settles.
As the Philippine economy reaches a pivotal inflection point, 2026 is shaping up to be a year of recovery and structural reinforcement. After a period of moderate growth, the Philippine economy is poised for renewed momentum, driven by the pickup in public infrastructure spending, sharper policy execution, and a more accommodative monetary environment.
This is the central theme of the 2026 Outlook presented by leading independent financial services provider and investment house Unicapital Group, through its securities brokerage arm Unicapital Securities, Incorporated (USI).
GDP Recovery Anchored by Infrastructure and Governance
Unicapital projects GDP growth to recover to 5.2% in 2026. This rebound is primarily supported by the resumption of public infrastructure spending and improved policy execution. Furthermore, ongoing governance reforms aimed at enhancing transparency are expected to play a crucial role in restoring investor confidence.
“While we’ve faced some moderated growth recently, the underlying macroeconomic foundation remains intact,” says Wendy Estacio-Cruz, Head of Research at Unicapital Securities, Inc. “We are stepping into 2026 at a decisive moment where fiscal support and measured monetary accommodation will reinforce domestic demand.”
Monetary Easing and Inflation Stability
As inflation remains manageable, this environment provides the Bangko Sentral ng Pilipinas (BSP) some room to support domestic demand.
Dennis D. Lapid, Officer-in-Charge of the Monetary Policy Sub-Sector at the Bangko Sentral ng Pilipinas, underscored the BSP’s efforts in ensuring appropriate monetary policy settings. This is part of its continued pursuit of price stability in an evolving environment.
“Our forecasts indicate a slight uptick in inflation this year largely due to supply-side actors,” Lapid said. “While these price pressures are likely to be temporary, they nonetheless require continued vigilance owing to possible spillover effects.”
Despite global volatility, the Philippines continues to demonstrate relative insulation. Household consumption — accounting for approximately 75% of GDP — remains the principal anchor of growth, complemented by steady remittances and resilient BPO revenues.
Equity Market: Significant Re-rating Potential
Unicapital has adopted a more constructive stance on Philippine equities for 2026, setting a PSEi target of 6,800, implying approximately 12% upside from end-2025 levels.
The index is currently trading at around 10x price-to-earnings, materially below its 10-year average of 16.4x and remains meaningfully below regional peers. Unicapital views this valuation gap as a reflection of cautious sentiment rather than structural deterioration, presenting a meaningful opportunity for investors as earnings momentum strengthens. With valuations well below its peers, Unicapital expects growing scope for a rotation into the PSEi on a compelling risk-reward basis.
“Our strategy for 2026 is defensive yet opportunistic,” Estacio-Cruz added. “We are prioritizing balance sheet strength and earnings visibility while maintaining selective exposure to structural growth themes. This allows investors to remain resilient while participating in the country’s medium-term recovery.”
Navigating External Risks
While maintaining a constructive domestic outlook, Unicapital continues to underscore the need for vigilance amid external risks, including geopolitical tensions, trade imbalances, and shifting global interest rate dynamics. Even with these uncertainties, the firm sees the Philippines entering 2026 with stronger buffers and a more resilient economic foundation, enabling it to manage volatility and sustain its recovery trajectory.
“Greater policy clarity and consistent execution will be key to sustaining market confidence,” Estacio-Cruz concluded. “With infrastructure momentum returning and macroeconomic conditions stabilizing, the Philippines is poised to strengthen its fundamentals and unlock the next phase of long-term growth.”
