Philippine Economic Growth Targets Revised for 2026-2028

Photo courtesy of PhilStar

The Philippine government has adjusted its economic growth targets for 2026 to 2028, following a corruption scandal that dampened economic momentum. Originally, the growth target was set at 6% to 8% annually through President Ferdinand Marcos Jr.'s term. Now, the government aims for a more modest growth of 5% to 6% in 2026, 5.5% to 6% in 2027, and 6% to 7% in 2028.

The downward revision stems from political instability linked to the Department of Public Works and Highways' corruption case, which adversely affected economic activity and consumer confidence. Economic planning secretary Arsenio Balisacan stated that despite these challenges, the national budget for 2026 is designed to support the new growth targets. He noted that these figures are aligned with forecasts by the International Monetary Fund and the Asian Development Bank.

Despite the reduced targets, Balisacan expressed optimism about the economy's future. He highlighted that inflation was down to 1.7% in 2025 and is projected to remain low, with a target of 2% to 4% this year. Additionally, the Bangko Sentral ng Pilipinas is expected to continue reducing interest rates, and the impact of U.S. tariff measures has been less detrimental than anticipated.

The initial impact of the 2025 corruption scandal is expected to persist into the first half of 2026. However, Balisacan believes economic growth will recover in the latter half of the year, aided by governmental policies promoting more inclusive growth across various sectors.

The 2026 budget prioritizes inclusivity with initiatives in health, education, and job creation aimed at reducing poverty. Balisacan emphasized that inclusive growth, rather than growth confined to a small segment, can lead to faster poverty reduction. This shift addresses historical patterns where periods of rapid economic growth did not significantly reduce poverty due to uneven benefit distribution, reported PhilStar.

Key Takeaways

• The Philippine government revised GDP growth targets due to corruption impacts.

• Inflation management and rate cuts are expected to bolster economic recovery.

• Policies now emphasize inclusivity to foster broader poverty reduction.

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Adapted by ASEAN Now from PhilStar 2026-01-06