PHL trims 2026, 2027 growth goals

THE PHILIPPINE government lowered its economic growth targets for this year and 2027, with the impact of the corruption scandal still expected to be felt in the first half, according to Economy Secretary Arsenio M. Balisacan.

At a briefing on Monday, Mr. Balisacan said the Development Budget Coordination Committee (DBCC) had lowered its gross domestic product (GDP) growth targets to 5%-6% for 2026 and 5.5%-6.5% for 2027, following a meeting in December.

These new targets are slightly lower than the earlier 6-7% growth goal for 2026 to 2028.

However, the DBCC retained the 6-7% GDP growth goal for 2028. President Ferdinand R. Marcos, Jr.’s term will end in mid-2028.

“The emerging number, growth scenario for 2025, is something like 4.8-5%,” Mr. Balisacan said. “But if you achieve 5% for the entire year, because the first three quarters’ average is already 5%, that still puts the economy into one of the fastest-growing economies in Asia.”

If realized, the 2025 GDP growth would be much slower than the 5.7% GDP growth in 2024 and below the government’s 5.5-6.5% GDP target.

This will also mark the fourth straight year that the Philippines will miss its GDP growth target.

Economic growth slowed to an over four-year low of 4% in the third quarter, as the flood control scandal affected government spending and hurt business and consumer confidence.

“The developments last year are likely still to be felt this year, although in a diminishing effect, and so we expect growth perhaps in the first quarter or at least in the first half to be still [not quite] as rosy as we would want it to be,” Mr. Balisacan said.

A corruption scandal involving flood control projects has weighed on government spending and household consumption following Mr. Marcos’ exposé in his fourth State of the Nation Address last July. 

Mr. Balisacan said the economic team still expects consumption to drive the economy despite massive budget cuts for infrastructure projects, specifically on flood control.

“Consumption, that’s likely going to be still, supported by employment, growth… and remittances. But we will also expect the rebound of consumer confidence… We do expect that the broad economy will grow as sufficiently strong especially toward the second half,” he said. 

Mr. Balisacan said economic activity should accelerate later in 2026 as governance reforms and improvements in public sector systems take effect, as reflected in the national budget. 

He said the downward revision to the targets reflected global and domestic uncertainties and follows similar assessments by multilateral institutions such as the International Monetary Fund (IMF), World Bank and Asian Development Bank (ADB).

The IMF last month trimmed the 2026 growth projection for the Philippines to 5.6% from 5.7% previously. The ADB sees the Philippines growing at 5.7%, while the World Bank expects GDP growth at 5.4%.

Mr. Balisacan said the recalibration of growth targets will not derail fiscal planning, as authorities remain focused on improving the quality of growth.

He cited increased budget allocations for health, education, social protection and job creation as key to making expansion more inclusive and accelerating poverty reduction.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the lowered targets reflect “realism” but also underscore that structural reforms are progressing too slowly.

“It signals that we’re under pressure to lift productivity and attract investments. Without bold action — on infrastructure, ease of doing business, and FDI (foreign direct investments) — we risk settling for a 5-6% growth ceiling instead of breaking past 7%,” he said via Viber.

“The message is clear: execution matters now more than ever.”

Ser Percival K. Peña-Reyes, director of the Ateneo Center for Economic Research and Development, said lowering official growth targets can bolster policy credibility by bringing expectations closer to prevailing economic conditions and reducing the risk of repeated forecast misses.

“However, if not accompanied by visible, credible reform action, it also risks signaling structural weaknesses in the economy and in governance under the current administration,” he said via Viber.

“Ultimately, how targets are framed and what policy measures accompany them will determine whether trimming boosts credibility or fuels concerns about economic weaknesses.” — Chloe Mari A. Hufana