THE government is scaling back its growth expectations following fresh headwinds that have compounded earlier setbacks, a Cabinet official said on Wednesday.
Socioeconomic Planning Secretary Arsenio Balisacan acknowledged that economic growth was likely to fall short of targets, citing the cumulative impact of last year’s corruption issues and the war in the Middle East.
“It would be [slower], given this unforeseen development,” he told reporters.
“We’re trying to recover from the infrastructure issue last year. And then you are hit again by an even more serious problem. So it’s, of course, understandable that you can’t expect to be better than what you had in previous quarters,” he added.
Growth targets were lowered last December as a massive flood control project scandal led to government spending cutbacks and dampened consumer and business sentiment. Instead of 6.0-7.0 percent, the government is now aiming for just 5.0- to 6.0-percent growth this year.
The targets for 2027 and 2028 were also revised to 5.5-6.5 percent and 6.0-7.0 percent, respectively, from 6.0-8.0 percent.
The corruption scandal, which led to growth slumping to just 3.0 percent in the fourth quarter of last year, led to a full-year result of 4.4 percent, well below the 5.5- to 6.5-percent goal.
Balisacan said the interagency Development Budget Coordination Committee would be meeting next month after the release of preliminary first-quarter growth data on May 7.
Some analysts have said that while a rebound from October-December 2025’s 3.0 percent remains likely, the improvement will likely be minimal given the impact of surging energy prices caused by the US-Israel war on Iran.
The Department of Economy, Planning and Development, which Balisacan heads, has said that in a mild energy crisis, growth could ease by 0.15 to 0.20 percentage point to about 5.3-5.35 percent. This scenario assumes only modest inflation, limited impact on remittances and a slight slowdown in consumer spending.
In a worst-case scenario, however, growth could drop more sharply by 1.47 to 1.95 percentage points, limiting the expansion to 3.5 to 4.0 percent. This would reflect heavier pressure on household incomes as higher inflation reduces purchasing power and remittance-reliant families cut back on spending.
“I think that everybody knows what the situation is with this Middle East crisis. No country was spared from that,” Balisacan said.
“Some would be worse off than others because of their different exposures to the Middle East conflict. As you already know, most of our fuel needs, whether in raw or refined fuel, come from the Middle East, directly or indirectly,” he added.
“So we were affected by the shocks. So what we have been doing over the past few weeks is to ensure that the economy is not severely slowed down by this shock.”
