DBCC cuts PH 2026 growth target to 3.5-4.5%

MANILA, Philippines – The Development Budget Coordination Committee (DBCC) slashed the Philippine economic growth target to 3.5 percent to 4.5 percent for 2026, following a sharp slowdown in the first quarter amid the Middle East war, oil shock and a slump in government spending.

In a TV interview, Economic Planning Secretary Arsenio Balisacan said the decision to lower the target from the previous 5-percent to 6-percent range comes despite expectations that economic conditions will improve in the latter half of the year.

READ: ADB cuts 2026 PH GDP growth forecast to 4.4%

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“We expect that the situation will improve in the second half. The second quarter is still a little problematic, in the sense that we still see some lag effects of the previous quarter and the last half of last year’s effects coming in,” Balisacan said.

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“But from the fiscal point of view, we are seeing improvements in the second half,” he added, noting that delayed government spending is expected to catch up in the coming months.

First-quarter economic growth slowed further to 2.8 percent from 3 percent in the previous quarter after the economy was hit by a double whammy of higher oil prices triggered by the Middle East war and weaker public spending from the lingering graft probe constraints.

Infra spending slowdown

According to Balisacan, growth could have reached 3.8 percent had government spending proceeded as expected. Government expenditure growth slowed sharply to 4.8 percent in the first quarter from 18.7 percent a year earlier.

“We have to improve and recover trust and confidence in public policy and governance. And that’s where we’ve been very much preoccupied in the last couple of months. It’s to ensure that accountability is back,” Balisacan said.

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READ: Gov’t infra spending still sluggish as of end-March

Asked whether the recent oil shock had undermined the country’s long-term growth prospects, Balisacan remained bullish, saying the economy’s fundamentals remain intact given the substantial progress over the past 15 years.

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“I don’t think that the recent shocks, particularly this Middle East crisis, have eroded that narrative. In fact, we see continued confidence in the international community. I do think that if we are able to navigate this Middle East conflict well, and of course our domestic issues too, we should be able to get back to that high-growth scenario,” he said.

The country’s chief economist did not disclose the revised growth targets for 2027 and 2028, which currently stand at 5.5 percent to 6.5 percent and 6 percent to 7 percent, respectively.

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The DBCC has yet to release the official recalibrated macroeconomic assumptions and fiscal targets, although Balisacan said these were expected to be announced within the week. INQ