EVEN AS A NON-ECONOMIST, I don’t subscribe to setting economic growth targets since our country is part of a global economy, thus any virus that hits it, hits us. Thus, goal setting is, at best, a guessing game.
Targets are good to a certain extent, but in the end such targets somehow limit our capacity to grow beyond these parameters, in much the same way that failure to meet such targets would make us look badly at ourselves to the point of resorting to blame games– determining which sector failed the overall economy.
With the global uncertainties now besetting the world economic order– Trump’s tariffs, geopolitical tensions in the MIddle East, the continuing war in Ukraine, global supply disruptions and supply chain limitations– naturally all these would impact a country’s growth, like ours. So it is pointless to set goals/targets of economic growth, unless we have full control over local and international risks and threats.
‘With the global uncertainties now besetting the world economic order– Trump’s tariffs, geopolitical tensions in the MIddle East, the continuing war in Ukraine, global supply disruptions and supply chain limitations– naturally all these would impact a country’s growth, like ours.’
GLOBAL UNCERTAINTIES
Just recently, our economic managers revised the gross domestic product (GDP) target for 2025 from 6 to 7 percent, down to 5.5-6.5 percent with exports expected to shrink by 2 percent amid weakening global demand because of trade tensions and geopolitical risks.
At the 191st meeting of the Development Budget Coordination Committee (DBCC), officials also narrowed the inflation forecast to 2–3 percent, from 2–4 percent — the first time since 2002 that the inflation assumption has been reduced to a one-percentage-point range—coinciding with the Bangko Sentral ng Pilipinas’ adoption of an inflation-targeting framework, reported Bilyonaryo..
“The revisions take into account heightened global uncertainties, such as the unforeseen escalation of tensions in the Middle East and the imposition of US tariffs,” the DBCC statement said.
“Despite these headwinds, the DBCC remains vigilant and ready to deploy timely and targeted measures to mitigate their potential impact on the Philippine economy.”
TRADE PARTNERSHIPS
Despite rising global oil prices, the DBCC retained its assumption for Dubai crude at $60–70 per barrel through 2026, along with a ₱56–₱58 exchange rate projection against the U.S. dollar.
The DBCC officially reduced its previous goal of 8 percent GDP growth for the remainder of President Marcos Jr.’s term but now targets a more realistic 6-7 percent from 2026 to 2028, with a modest 2 percent export growth.
“To sustain this economic momentum, the government is focused on maintaining price stability while expanding trade partnerships and enhancing the productivity of domestic industries,” the DBCC said.
“Accelerated implementation of government programs and projects also remains a key priority, alongside seizing growth opportunities in the services sector.
POTENTIAL IMPACT
The Philippine economy grew by a weaker-than-expected 5.4 percent in the first quarter from the 5.9 percent expansion a year ago, the AFP quoted Budget Secretary Amenah Pangandaman saying.
The inflation assumption for 2025 was narrowed to 2 percent-3 percent from a previous outlook of 2 percent-4 percent. It kept the 2-4 percent inflation assumption for 2026 to 2028. In the first five months, inflation has averaged 1.9 percent, slightly below the Bangko Sentral ng Pilipinas’ (BSP) 2-4 percent target range.
NEDA Secretary Arsenio Balisacan warned that the potential impact of a prolonged war in the Middle East could badly affect the Philippines and the rest of the world. Oil prices rose on Thursday after a sharp slump after the Israel-Iran ceasefire was announced. Reuters reported Brent crude futures rose 0.37 percent to $67.93 a barrel, while US West Texas Intermediate crude gained 0.45 percent to $65.21.
Foreign exchange is assumed to “remain stable” and average to P56-P58 per dollar from this year until 2028 because of lower domestic inflation, which will continue to be shaped by global financial conditions and external trade performance, the DBCC said.
TRUMP’S IMPACT
Trade is expected to be sluggish, reflecting the impact of the Trump administration’s tariff policy.
“Goods exports are projected to contract by 2 percent in 2025 (from a previous projection of 6 percent growth), largely due to slower global demand and heightened trade policy uncertainties, before recovering to a modest growth of 2 percent from 2026 to 2028,” DBCC said.
The DBCC said it expects the budget deficit to balloon to 5.5 percent in 2025 as a share of GDP from 5.3 percent previously. It also sees the deficit as a share of GDP to widen to 5.3 percent in 2026 from 4.7 percent previously.
The projected budget gap as a percentage of GDP for 2027 was raised to 4.8 percent from 4.1 percent previously, while for 2028, it was revised to 4.3 percent from 3.7 percent previously.