The interagency Development Budget Coordination Committee (DBCC) has revised the country’s medium-term macroeconomic assumptions, growth projections, and fiscal program for 2025 to 2028 in light of mounting global risks, including geopolitical tensions in the Middle East and new U.S. tariffs.
According to the DBCC and despite headwinds, the economy is expected to grow 5.5 percent to 6.5 percent in terms of the gross domestic product (GDP) this year following a 5.4 percent expansion in the first quarter. The original target ranged from 6 percent up to 8 percent. From 2026 to 2028, growth is projected at 6 percent to 7 percent, also from 6 to 8 percent originally. Budget Secretary Amenah Pangandaman noted that strong domestic demand, backed by structural reforms like the CREATE MORE Act and PPP Code, will continue to drive growth and shield the economy from external shocks.
Forecast inflation for this year has been narrowed to a 2 percent to 3 percent range, with expectations of remaining within 2 percent to 4 percent through 2028. Pangandaman attributed this to a whole-of-government approach that supports price stability. The inflation outlook provides the Bangko Sentral ng Pilipinas (BSP) with more room to ease monetary policy, potentially lowering borrowing costs and stimulating domestic consumption.
Due to subdued global demand, goods exports are forecast to contract by 2 percent in 2025 before recovering to 2 percent expansion in 2026–2028. Imports, buoyed by resilient domestic activity, are expected to rise 3.5 percent in 2025 and 4 percent annually thereafter. The peso is projected to trade between P56 to 58 per USD through 2028, aided by stable inflation and strong reserves.
The updated fiscal program emphasizes disciplined consolidation. The deficit is projected to decline from 5.5 percent of GDP in 2025 to 4.3 percent by 2028, even as infrastructure and social investments remain robust. Revenues are set to climb from 15.9 percent to 16.3 percent of GDP over the same period, driven by tax reforms and digitalization. Disbursements, while expansive, will be kept within 20.6 percent to 21.5 percent of GDP.
The FY 2026 proposed national budget totals P6.793 trillion, or 22 percent of GDP—up 7.4 percent from 2025. It will prioritize education, health, digital transformation, and workforce upskilling under the theme “Nurturing a Future-Ready Generation.”
Pangandaman emphasized that the government remains committed to “a calibrated fiscal consolidation path” that balances growth and debt sustainability. Key reforms—such as the Liberalizing the Lease of Private Lands Act and Enhanced Fiscal Regime for Mining—are expected to boost competitiveness and long-term investor confidence.
“Despite external uncertainties, the Philippines is well-positioned to sustain its economic momentum through coordinated policy actions and strategic investments aimed at achieving our Agenda for Prosperity under Bagong Pilipinas,” Pangandaman said.
