The Philippine government’s economic managers on Thursday revised downward the country’s growth forecast and inflation outlook for 2025, citing heightened global uncertainties.
The Development Budget Coordination Committee (DBCC) reviewed and updated its medium-term macroeconomic assumptions, growth targets and fiscal program for 2025 to 2028.
“The revisions take into account heightened global uncertainties, such as the unforeseen escalation of tensions in the Middle East and the imposition of U.S. tariffs,” the DBCC said in a statement.
The Philippine economy grew by 5.4 percent in the first quarter of 2025, driven by accelerated government and household spending.
For the full year, growth is now projected at 5.5 percent to 6.5 percent, lower than the previously revised forecast of 6.0 percent to 6.5 percent for the year. This new target aligns with forecasts from private sector analysts and international financial institutions.
From 2026 to 2028, the Philippine economy is projected to expand by 6.0 percent to 7.0 percent, reflecting a more measured and resilient outlook amid global headwinds. This new target growth range is lower than the earlier estimate of 6.5 percent to 8.0 percent for the same period.
To sustain economic momentum, the government is focused on maintaining price stability while expanding trade partnerships and enhancing the productivity of domestic industries.
Inflation is now expected to settle between 2.0 percent and 3.0 percent in 2025, with the DBCC stating that a “whole-of-government approach continues to support a low inflation environment.” Inflation is expected to stabilize at 2.0 percent to 4.0 percent from 2026 to 2028, consistent with the latest outlook that inflation will remain within the target range over the policy horizon.
Tempered by easing global demand and expected increases in global oil inventories, Dubai crude oil prices are expected to average between $60 to $70 per barrel from 2025 to 2028, despite escalating geopolitical tensions.
The foreign exchange rate is assumed to remain stable, averaging 56 to 58 Philippine pesos per U.S. dollar from 2025 through 2028. This is supported by lower domestic inflation and will continue to be shaped by global financial conditions and external trade performance.
Goods exports are projected to contract by 2.0 percent in 2025, largely due to slower global demand and heightened trade policy uncertainties, before recovering to a modest growth of 2.0 percent from 2026 to 2028.
Goods imports are expected to rise by 3.5 percent in 2025 due to resilient domestic economic activity and further increase to 4.0 percent in the succeeding years, supported by stable domestic consumption and sustained infrastructure spending.
The government said it is committed to reducing the fiscal deficit from 5.5 percent of GDP in 2025 to 4.3 percent by 2028, while simultaneously ramping up investments in infrastructure, human capital, and social services.
“This well-calibrated approach reflects our strong resolve to uphold fiscal discipline without compromising our goals of inclusive and sustainable development, even amid a more challenging global landscape,” the DBCC said.
Revenue collections are expected to increase steadily throughout the period, reaching 16.3 percent of GDP by 2028. Key drivers include the implementation of recently enacted revenue reforms, such as the value-added tax on nonresident digital service providers and capital markets efficiency promotion, as well as sustained improvements in tax administration, compliance enforcement, and digitalization initiatives.
National government disbursements will remain a major growth driver over the medium term, averaging 21.1 percent of GDP annually. Infrastructure spending will be sustained at 5.0 percent to 6.0 percent of GDP each year, ensuring continued improvements in physical connectivity. Public investments will also focus on education, health care, agriculture, digital transformation, and social protection, as reflected in the priorities under the Philippine Development Plan (PDP) 2023–2028.
The proposed 2026 national budget is set at P6.793 trillion, equivalent to 22.0 percent of gross domestic product.
This represents a 7.4 percent increase from the 2025 budget of P6.326 trillion, reflecting the government’s commitment to supporting inclusive economic growth while upholding fiscal sustainability.
The DBCC said it remains resolute in advancing a growth-enhancing fiscal consolidation agenda that promotes a resilient, inclusive and sustainable economy.
“By nurturing future-ready generations through coordinated policy implementation and strategic investments, the government is committed to reducing poverty to single-digit levels, creating quality jobs, safeguarding macroeconomic stability, and ultimately achieving our Agenda for Prosperity in the Bagong Pilipinas — even amidst global uncertainties,” it said.
