The Development Budget Coordination Committee (DBCC) on Monday adjusted the government’s medium-term macroeconomic assumptions, growth targets and fiscal program from 2024 to 2028 to reflect emerging domestic and global developments.
It made the adjustments after the Philippines’ gross domestic product (GDP) expanded by 5.8 percent in the first three quarters of 2024, remaining among the fastest-growing economies in Asia ahead of Malaysia (5.2 percent), Indonesia (5.0 percent), China (4.8 percent) and Singapore (3.8 percent).
“Despite domestic challenges, we are optimistic that we can still attain our growth target for the year of 6.0 to 6.5 percent. In particular, we expect the Philippine economy to bounce back during the last quarter, given the anticipated increase in holiday spending, continued disaster recovery efforts, low inflation, and a robust labor market,” the economic managers said.
The 2025 growth target was revised downward from the earlier forecast of 6 percent to 7 percent. The DBCC also set a broader growth target band of 6 percent to 8 percent for 2025 to 2028, reflecting the anticipated impact of structural reforms and evolving domestic and global uncertainties.
“To achieve these targets, we remain committed to implementing reforms outlined in the Philippine Development Plan (PDP) 2023–2028. These include accelerating infrastructure investments, enhancing the ease of doing business, and boosting national competitiveness,” the DBCC said.
“We will also soon implement one of our growth-enhancing legislative measures—Republic Act No. 12066 or the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy [CREATE MORE]—which will support businesses, attract foreign investments, and spur higher economic growth,” the DBCC said.
The DBCC also revisited the medium-term macroeconomic assumptions, taking into consideration recent global and domestic developments.
“Inflation is expected to average at 3.1 to 3.3 percent for the full year, significantly lower than the average inflation rate of 6.0 percent last year. This is supported by whole-of-government efforts such as the reduction in rice import tariffs, increased agricultural production, and other broad-based measures along with favorable supply conditions in the global market,” the DBCC said.
Data from the Philippine Statistics Authority (PSA) showed that inflation averaged 3.3 percent in the first 10 months of 2024, despite elevated prices globally.
“We are determined to maintain price stability by keeping inflation low and stable amid easing monetary conditions, improving labor market conditions, and productivity-enhancing structural reforms. For 2025 to 2028, the inflation assumption is maintained at 2.0 to 4.0 percent,” the DBCC said.
The assumptions for Dubai crude oil prices for 2024 were slightly narrowed to $78 to $81 per barrel from $70 to $85, reflecting current market developments.
For 2025 to 2028, crude oil price assumptions were reduced to $60 to $80 a barrel from $65 to $85, with the anticipated improvements in global oil production over the medium term. This is also consistent with the backwardation observed in oil futures markets.
Meanwhile, the Philippine peso is anticipated to remain stable at an average of 57 to 57.50 against the US dollar for 2024, given sustained remittance growth, recovery in travel services and growing BPO revenues.
“These favorable developments will support and keep the currency resilient against global headwinds. It is expected to broadly stabilize at 56 to 58 against the USD for 2025 and 55 to 58 against the USD for 2026 to 2028,” the DBCC said.
Goods exports growth in 2024 was revised downwards to 4.0 percent, in line with the observed slowdown in export revenues in recent months as well as the revision in the outlook for the domestic semiconductor industry.
The growth projection for goods imports in 2024 was maintained at 2.0 percent, as year-to-date figures remained on track and the outlook for domestic consumption remains at current pace.
The DBCC maintained its medium-term fiscal targets for 2025 to 2028. From January to October 2024, revenue collections increased 16.8 percent to P3.77 trillion, and are expected to rise to P4.383 trillion (16.5 percent of GDP) by the end of the year.
“On average, revenue collections are expected to remain at 16.5 percent of GDP from 2025 to 2028, reaching P6.250 trillion [17.0 percent of GDP] by the end of the administration. This means that over the medium term, the government will be collecting a billion more in revenues a day annually,” the DBCC said.
These will be supported by recalibrated legislative measures that will provide a significant revenue boost to the government, such as the recently enacted VAT on Digital Services Act, and by tax administration reforms centered on digitalization, it said.
The DBCC said that on the expenditure side, government spending remains one of the major contributors to the economic growth. “We expect this spending performance to continue and further improve during the last quarter of the year, reaching P5.908 trillion [22.3 percent of GDP] by the end of 2024,” the economic managers said.
Over the medium term, disbursements are estimated to remain at an average of 21 percent of the GDP, reaching P6.182 trillion or 21.5 percent of GDP) in 2025 and P7.622 trillion or 20.7 percent of GDP by 2028.
“As a centerpiece for sustaining our high growth trajectory, we will maintain infrastructure spending at 5.0 to 6.0 percent annually over the entire plan period. Aside from infrastructure development, we will also invest heavily in our human capital and in programs and projects that promote social and economic transformation, in line with the PDP 2023-2028,” the DBCC said.
The DBCC retained its deficit program, which will decline from 5.7 percent of GDP in 2024 to 3.7 percent of GDP in 2028. “Our fiscal discipline and prudent debt management have recently earned our country a revision on credit rating outlook from ‘stable’ to ‘positive’ from the S&P Global and a series of high-rating affirmations from different global credit rating agencies. This will enable us to borrow at lower costs, providing more fiscal space to support infrastructure development and other growth-enhancing programs and projects,” it said.
“Pursuing a whole-of-government and a whole-of-society approach, the DBCC will remain steadfast in sustaining the country’s high-growth trajectory and managing inflation, accelerating the implementation of well-targeted social services and structural reforms that will enable us to achieve our goal of reducing poverty incidence and decreasing unemployment rates,” the DBCC said.
