inflation

AFTER a bruising 2025, many executives are entering 2026 with a familiar mix of caution and hope. Last year tested leadership teams on multiple fronts: domestic disruptions, corruption-related confidence concerns, weaker investment momentum, and renewed external pressure from global trade frictions, including the lingering threat of US tariffs. For many companies, strategy meetings became less about expansion and more about survival: particularly protecting margins, defending cash, and keeping operations stable amid volatility.

But here is the thing: 2026 does not look like a blockbuster year. It looks like something more realistic and more useful for disciplined operators. From a financial analyst’s lens, this is shaping up to be a “quiet comeback” year: steady growth, manageable inflation, and policy conditions that can support business. That is, if you translate macroeconomic signals into decisive execution.

A recovery, not a victory lap

Multilateral institutions are converging on a modest rebound. GDP growth forecasts cluster around the 5% to 6% range, anchored by resilient domestic consumption, easing inflation versus prior highs, and a more supportive monetary policy environment. The IMF sees a sub-6% growth through 2027. The World Bank expects above 5% until 2027, emphasising that household consumption remains a core stabiliser even as fiscal policy tightens. The BSP has also indicated growth potential within the 5% to 6% band, and the government has adjusted its own target to the same range, implicitly acknowledging that 2025’s turbulence still leaves aftershocks.

What does this mean for business? It means 2026 will likely be “steady but uneven”. Companies tied to domestic demand may see more consistent tailwinds, while export-linked and capex-heavy sectors remain more sensitive to external shocks, sentiment, and financing conditions. In practical terms, the market is not rewarding bravado; it is rewarding execution discipline.

Inflation is supportive until it is not

Inflation dynamics matter because they shape borrowing costs, wage pressure, and consumer confidence. After unusually low prints in 2025 (averaged around 1.7% to 1.8%), inflation is expected to edge up modestly in 2026 to roughly around 2.3% to 3.2%, influenced by base effects and commodity pressures, while staying within the BSP’s 2% to 4% target range. That is generally constructive: inflation low enough to preserve purchasing power but not so low that it signals weak demand.

Still, inflation risk is rarely theoretical. Food prices can swing, energy markets can surprise, and weather disruptions are a recurring reality in a typhoon-prone country. The takeaway is simple: do not just “monitor inflation”. Build triggers and playbooks around it. If your margin is exposed to fuel, logistics, or imported inputs, you need predefined actions, not debates, when indicators move.

The external risk remains the X-factor

Even if the domestic base is improving, global uncertainties continue to cast a shadow. Prolonged trade barriers and tariff-related uncertainty can weigh on exports and business confidence, and fiscal tightening limits the government’s ability to cushion shocks. This is why 2026 strategies cannot be decks full of aspirations. It has to be operationalised: measurable, owned, and executable.

In other words, 2026 will reward the companies that run like an analyst would run a portfolio: protect downside, preserve liquidity, and fund options that can scale when conditions improve.

The 2026 financial analyst playbook: five moves that change outcomes

1. Run structured, short, and serious quarterly risk reviews

Hold a quarterly two-hour “risk committee” using a simple dashboard. Track five indicators: CPI releases (PSA), PHP/USD movements, BSP policy decisions, key tariff/trade announcements relevant to your sector, and governance/corruption-related news that may affect sentiment or permits. Score each risk 1 to 5, assign an owner, and define triggers. For example, if inflation hits 3.2%, execute a pricing protocol within seven days (price resets, bundle changes, contract repricing, promo redesign, etc.).

2. Diversify supply chains where it matters most.

Review your top 3 to 5 imported inputs by cost and operational criticality. Establish a strategic foothold with regional backup suppliers to cover a substantial segment (e.g., 20% to 30%) of mid-year requirements. For critical local items, consider shorter 3-to-6-month contracts to reset terms as conditions shift. Run one annual typhoon disruption drill to estimate lead times, rerouting, emergency procurement, and decision rights.

3. Build liquidity like a defensive asset, not an afterthought

Target cash plus committed credit covering 4 to 6 months of core operating expenses. Secure revolving credit lines while conditions are favourable, and do not wait until the bank sees stress. Implement a weekly 13-week rolling cash forecast; the discipline matters more than the software. SMEs can explore SB Corp guarantees to improve access and pricing.

4. Upskill for productivity gains that show up in margins.

Allocate a certain percentage of payroll for training linked to measurable KPIs. Prioritise AI-enabled operations, data analytics, and energy management basics. Aim to certify a growing segment of the workforce by year-end via TESDA-supported programs or scalable platforms. Track impact through pre/post measures: cycle time, error rates, conversion rates, and turnaround time.

5. Upgrade budgeting into rolling forecasts with flexibility.

Move from annual “set-and-forget” budgets to rolling quarterly forecasts with ~10% reallocation flexibility. Hold 30-minute monthly pulse checks: what changed, what it means, and what actions follow this month. In uncertain environments, speed beats perfect models.

Execution is the advantage

The road through 2026 may still feel uneven, but it is far from unworkable. The Philippines retains strong underlying demand, a young and adaptable workforce, and meaningful upside in renewables and digital services. The companies that are expected to break out this year will not be the ones with the boldest narratives; they will be the ones with clear triggers, named owners, protected liquidity, and fast decisions.

Resilience in 2026 is not a slogan. It is a system. Build it now, and you will not just survive volatility. You’ll turn it into your edge.

Seb Serrano is a Director for the Advisory Services Practice Area at P&A Grant Thornton. One of the leading audit, tax, advisory, and outsourcing firms in the Philippines, P&A Grant Thornton is composed of 29 Partners and 1,500 staff members. We’d like to hear from you! Connect with us on LinkedIn and like us on Facebook: P&A Grant Thornton and email your comments to business.development@ph.gt.com. For more information, visit our website: www.grantthornton.com.ph.