The government is betting on an economic rebound in 2027, building its proposed P7.2-trillion national budget around faster growth, easing inflation, and a gradual recovery in investment after a bruising year.
The National Expenditure Program submitted by the Department of Budget and Management to the House of Representatives is 6 percent larger than this year’s P6.793-trillion budget, with its assumptions pointing to a recovery that will need both stronger private demand and more effective public spending.
GDP growth is projected at 5 to 6 percent in 2027, sharply higher than the 3.5 to 4.5 percent target for 2026. Inflation, meanwhile, is expected to cool to 4 to 5 percent from 6 to 7 percent this year.
Those assumptions are doing plenty of work.
The economy entered the budget cycle with gross capital formation down 9.2 percent in the second quarter, construction output plunging 14.8 percent, and household consumption growing just 2.8 percent. Agriculture expanded 2.7 percent, but food inflation hit 5.3 percent in July, leaving consumers with little room for exuberance.
The budget aims to change that equation.
Government revenues are projected to climb to P5.206 trillion from P4.807 trillion this year, while the fiscal deficit is seen at P1.695 trillion, or 5.1 percent of GDP. That is higher in peso terms than this year’s P1.659 trillion deficit, but lower relative to the size of the economy.
The government is also counting on friendlier external conditions. Oil prices are assumed at USD70 to USD90 a barrel, compared with USD80 to USD100 this year, while the peso-dollar assumption remains unchanged at P60 to P62.
But the recovery comes with a weather-sized asterisk.
The Development Budget Coordination Committee expects El Niño to drag on growth in the first half of 2027, potentially squeezing agricultural output and food prices just as inflation is supposed to be cooling.
That makes the P7.2-trillion budget less a declaration that recovery is coming than a financial blueprint for forcing it.
The real test will be whether government spending can revive construction and investment, while putting enough money back into household wallets to get consumption moving again.
