Government downscales growth targets

PHILIPPINES - In Brief 28 Jun 2025 by Diwa Guinigundo

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The Philippine Government, through the Development Budget Coordination Committee (DBCC) a few days ago, reviewed and updated its medium-term macroeconomic assumptions, growth targets and fiscal program for this year and the next two years 2026 and 2027. Given the increased uncertainties and recent market volatilities globally as well as the imposition of higher US tariffs, the Philippines downscaled GDP growth from 6.0%-6.5% to 5.5%-6.5% for 2025. First quarter growth stood at only 5.4%. As such, the Philippines has to be ambitious to grow an average of 6.2% for the last three quarter of 2025 to achieve even the original lower end at 6.0%. DBCC chair Budget Secretary Amenah Pangandaman also clarified that such a downgrade reflects “the forecasts of private sector analysts and international financial institutions.” For 2026 and 2027, the DBCC also narrowed the growth targets from 6%-8% to 6.0%-7%, a virtual admission of the difficulty of aiming for a higher range. Again, this reflects the global headwinds and the potential hit on inflation when oil prices escalate again which could weaken the tempo of economic growth. With the sustained easing of inflationary pressures, the DBCC decided to keep the inflation target of 2.0%-4.0%. What is interesting to note is that while the DBCC recognized the greater uncertainty in the global markets, its assumption on oil prices appears to be quite optimistic at $60 to $70 per barrel from this year until 2028. A resurgence of ballistic exchange even after the truce might be enough to throw both the advanced and emerging markets into unmitigated oil price spiral and serious upset of the global value chain. The peso-dollar exchange rate...