Asia Macro Weekly

The Philippines' economy is struggling with 'twin deficits' that leave it vulnerable to energy price shocks, forcing the central bank into a hawkish stance despite weak consumption. Regionally, inflation is trending higher, prompting expected rate hikes in India and Thailand.

Key Takeaways

• 1.The Philippines is facing structural 'twin deficits' (current account and budget) that limit fiscal flexibility to manage energy price shocks.
• 2.Inflation management in the Philippines has shifted almost entirely to monetary policy, necessitating rate hikes despite weak domestic demand.
• 3.Regional inflation pressures are rising across Indonesia, South Korea, Thailand, and the Philippines, leading to a hawkish central bank bias.

Table of Contents

• Key view
• The three pre-existing macro weaknesses in the Philippines
• The only stable major macro parameter has also given way
• And existing weaknesses are being amplified
• The onus is squarely on monetary policy
• Macro implications
• Upcoming events and data
• Data calendar
• Forecasts
• Scheduled central bank meeting dates in 2026
• Recent insights
• Acronyms and abbreviations

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