S&P cuts Philippines, India growth forecasts on energy crisis

S&P Global Cuts Philippines and India Growth Forecasts Amid Oil-Driven Energy Crisis

S&P Global Ratings on Wednesday sharply lowered its growth forecasts for the Philippines and India, warning that energy stress from the West Asia conflict is weighing on two of the Asia-Pacific region’s most dynamic economies.

Philippines Faces Sharpest Downgrade in Region

The credit agency slashed its 2026 Philippine GDP growth projection to 4.1%, down from 5.8% previously — the most considerable downward revision among Asia-Pacific economies it monitors. The downgrade reflects sluggish consumer demand, reduced infrastructure investment, and high energy costs that are stifling economic activity.philstar

The Philippines is now expected to lag behind the broader Asia-Pacific region, where growth is forecast at 4.4% for 2026. The revision comes days after Philippine economic planning secretary Arsenio Balisacan said growth is now seen at 3.5% to 4.5%, below the government’s already lowered 5% to 6% target, citing the energy crisis and lingering effects of a corruption scandal that has curtailed government spending.reuters

S&P anticipates the Philippine economy will recover to 5.8% growth next year, though that is also below its earlier estimate of 6.2%. Inflation is expected to rise to 4.8% this year, with S&P forecasting the central bank’s policy rate will end 2026 at 5%, above the current 4.75%.bworldonline

India’s Growth to Slow to 6.6% in FY27

For India, S&P projects real GDP growth will decelerate to 6.6% in the fiscal year ending March 2027, compared with 7.7% in the previous fiscal year. The agency cited energy stress, expectations of a sub-par monsoon, and slowing global growth as key headwinds.freepressjournal

“We project real GDP growth will slow to 6.6 per cent in the fiscal year ending in March 2027, compared with 7.7 per cent in fiscal 2026, amid the energy stress, expectations of a sub-par monsoon, and slowing global growth,” S&P said in a report titled “Economic Outlook Asia-Pacific Q3 2026: AI-Exposed Markets To Outperform.”freepressjournal

The impact of El Niño has widened India’s rainfall deficit to 43% by June 22, while higher crude oil prices — India imports 88% of its needs — are stoking inflation. S&P warned consumer inflation could rise to 5.1% in FY27 and said it expects a policy rate hike in the second half of the fiscal year. The projection aligns with the Reserve Bank of India’s own estimate of 6.6% growth for FY27.rediff

Regional Outlook Shaped by Energy and AI

S&P’s broader Asia-Pacific outlook highlights a divergence: markets exposed to the AI-driven technology export boom are expected to outperform, while energy-importing economies bear the brunt of sustained oil price disruptions from the West Asia conflict. The Philippines, once forecast to be among the region’s fastest growers, now risks becoming a laggard as oil-driven inflation erodes household purchasing power and forces tighter monetary policy across the region.spglobal