Metrobank: Growth rebound may lift PH stocks in 2026
The local stock market may reverse its lackluster performance in the past year on expectations that the Philippines’ economic growth may rebound in 2026, Metrobank said while keeping a bearish outlook on the peso as the country’s trade imbalance persists.
In a research note, Metrobank chief economist Nicholas Mapa said brighter growth prospects could help revive local equities, which were dragged down last year by battered investor confidence amid an expanding antigraft crackdown that weighed on economic activity.
Mapa said the resulting “fiscal freeze” from the anticorruption drive was expected to ease this year.
He added that additional rate cuts from the Bangko Sentral ng Pilipinas (BSP), along with a rebound from last year’s unusually weak government spending during the election-related ban, could help lift economic growth.
“Despite global equity indices enjoying rallies fueled by hopes of monetary policy easing, the Philippine Stock Exchange (PSE) appeared to be stuck in low gear in the latter half of 2025,” the Metrobank economist said.
“However, given our expectations for growth to recover in 2026, we could finally see the trend of lackluster PSE performance broken in 2026,” he added.
Earlier this month, economic managers in the Marcos administration announced their watered-down growth ambitions as a widening corruption scandal delayed public works and eroded both business and consumer confidence.
Actual growth had already slowed to a four-year low of 4 percent in the third quarter of 2025 amid the sweeping antigraft drive.
The fallout dragged the PSE index down 7.29 percent last year, reflecting sharp swings in the peso that pushed the currency to record lows in the final trading sessions of 2025.
The peso volatility has carried into the new year. The currency slid to a fresh record low of 59.355 to the dollar on Jan. 7, weighed down by a strong greenback as investors looked for clues on the future path of US monetary policy.
Mapa said the peso was likely to remain under pressure this year as the country’s large import bill continues to drive dollar outflows.
“With the Philippines expected to run a current account deficit, we can expect the peso to remain pressured,” he said.
Steep yield curve
To help “offset” the economic drag from the scandal, the BSP cut its benchmark rate by a quarter point to 4.5 percent in December, bringing the total reductions since the easing cycle began in August 2024 to 2 percentage points.
Mapa said muted inflation and sluggish demand expected in 2026 leave room for further rate cuts this year.
Metrobank expects the central bank to press ahead with its easing campaign, lowering rates by a total of half a percentage point and bringing the policy rate to 4 percent by the end of the year.
