Days after the Philippines achieved upper-middle-income status, the government lowered its 2026 economic growth forecast to 3.5% to 4.5%. Economic managers cited domestic and external uncertainties including governance issues and geopolitical tensions.
The Development Budget Coordination Committee revised its medium-term assumptions on July 8. It now projects growth of 3.5% to 4.5% in 2026 before recovering to 5% to 6% from 2027 onward. This marks a further reduction from the December 2025 targets of 5% to 6% for 2026.
Inflation is expected to average 6% to 7% this year before easing in later periods. The committee pointed to risks from oil prices, weather shocks, slower remittance growth, and reduced visitor arrivals. It also flagged an impending El Niño that could affect agriculture.
The government plans a P7.2 trillion national budget for 2027. Officials aim to narrow the deficit gradually through tax reforms and spending discipline while maintaining large disbursements.
