The Market Monitor Minding the Nation's Business
The country’s economic managers have revised the growth forecast for 2025, citing escalating global risks and trade tensions.
Following the 191st Development Budget Coordination Committee (DBCC) meeting, Budget Secretary and DBCC Chair Amenah Pangandaman announced that the GDP growth assumption for next year was adjusted to 5.5 to 6.5 percent, down from the earlier target of 6 to 8 percent.
For the period 2026 to 2028, the economy is now expected to grow at a more tempered pace of 6 to 7 percent annually.
Pangandaman said the revisions reflect growing global instability, including tensions in the Middle East and new U.S. tariff policies. Still, she assured that the government remains alert and prepared to implement strategic measures to cushion the impact on the Philippine economy.
Despite the downgraded outlook, Pangandaman noted that the Philippines continues to be one of the fastest-growing economies in Southeast Asia, buoyed by strong domestic demand.
She stressed that the administration will sustain economic momentum through structural reforms such as the CREATE MORE Act and the Public-Private Partnership Code, both aimed at boosting trade and investment competitiveness.
Other key legislative measures, recently ratified by Congress, are also poised to reinforce economic resilience. These include the Liberalizing the Lease of Private Lands by Foreign Investors Act, Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, Accelerated and Reformed Right-of-Way (ARROW) Act, and the Konektadong Pinoy Act.
The DBCC also updated macroeconomic assumptions to align with current global and domestic trends. Inflation for 2025 has been trimmed to a range of 2 to 3 percent from the earlier 2 to 4 percent, while inflation expectations for 2026 to 2028 remain at 2 to 4 percent. Crude oil price assumptions for 2025 to 2028 were lowered to USD60 to USD70 per barrel, reflecting moderate expectations despite geopolitical tensions. The peso-dollar exchange rate is projected to stay stable at P56 to P58, supported by easing domestic inflation.
Trade projections were also recalibrated. Goods exports are expected to decline by 2 percent in 2025 due to subdued global demand and policy uncertainties, before recovering with a 2 percent growth rate from 2026 to 2028. Meanwhile, goods imports are forecast to rise by 3.5 percent in 2025, increasing further to 4 percent in subsequent years as domestic consumption and infrastructure activity remain strong.
The government’s medium-term fiscal program also underwent revisions. Revenue expectations for 2025 were adjusted downward to P4.52 trillion from P4.64 trillion. Revenues are still projected to rise steadily, reaching 16.3 percent of GDP by 2028, driven by recently enacted reforms such as VAT on non-resident digital services and improvements in tax compliance and digitalization.
National government spending will continue to play a pivotal role in economic expansion, averaging 21.1 percent of GDP annually. Infrastructure investments will be maintained at 5 to 6 percent of GDP, focusing on enhancing physical connectivity and investing in critical areas like education, healthcare, agriculture, digital transformation, and social protection—key pillars of the Philippine Development Plan 2023–2028.
The DBCC affirmed its commitment to a growth-oriented fiscal consolidation strategy that fosters economic stability, reduces poverty to single-digit levels, and promotes inclusive development. Pangandaman emphasized that through cohesive policy action and strategic public investments, the government remains focused on realizing its “Agenda for Prosperity” under the Bagong Pilipinas framework, despite global economic headwinds.