The Philippine government has revised its economic growth target, citing external and internal challenges, including the ongoing Middle East conflict and weak consumer and business confidence.
The Department of Economy, Planning, and Development (DEPDev) has set an average growth rate of 3.7% for the remaining three quarters of the year to meet the revised target of 3.5%-4.5% for 2026.
The economy expanded by 2.8% in the first quarter, a decline from 3% in the previous quarter and 5.37% a year earlier, due to domestic and external shocks that slowed growth and pushed inflation higher.
DEPDev Secretary Arsenio M. Balisacan attributed the challenges to weak public infrastructure since late 2025 and the escalation of the Middle East conflict, which has fueled inflation and dampened business and consumer confidence.
However, Mr. Balisacan expressed optimism that economic conditions will improve in the second half of the year, citing a pickup in government spending and infrastructure implementation.
The government is prioritizing the restoration of business confidence and accelerating growth through faster infrastructure implementation and stronger private investment to support the recovery.
Additionally, the government will focus on containing inflation, strengthening food and energy security, investing in education, healthcare, digital transformation, and workforce development, and improving governance to sustain long-term productivity and inclusive growth.
However, inflation remains a downside risk, with the central bank expecting it to stay above its 2%-4% target for the rest of the year.
A BusinessWorld poll of 18 analysts yielded a median estimate of 6.6% for June inflation, which falls within the central bank’s 6%-7% projection for the month.
Mr. Balisacan also cautioned that weaker economic growth could put the Philippines’ newly attained upper-middle income country (UMIC) status at risk, highlighting the need to bring inflation under control, pursue fiscal consolidation, improve competitiveness, and ensure productivity drives economic growth.
To maintain its UMIC classification, the government must also ensure that the economy meets the World Bank’s threshold of a gross national income (GNI) per capita of $4,636 to $14,375.
