MANILA — The Philippine government has trimmed its economic growth target for 2025 amid mounting global uncertainties, including geopolitical tensions in the Middle East and newly imposed U.S. tariffs on international trade.
The Development and Budget Coordination Committee (DBCC), a key policymaking body composed of the country’s top economic managers, on Thursday announced a revised growth projection of 5.5 to 6.5 percent for 2025. This is down from the previous 6 to 8 percent range set in December 2024.
The adjustment aligns with projections from global institutions. The World Bank expects the Philippine economy to grow by 5.3 percent, while the Asian Development Bank (ADB) forecasts a 6 percent expansion—though the latter figure was released prior to recent tariff developments in the United States.
Despite the downgrade, the DBCC emphasized that the Philippines remains among the fastest-growing economies in Southeast Asia, bolstered by resilient domestic demand and ongoing structural reforms.
2026 Budget Proposal Hits ₱6.79 Trillion
Looking ahead, the DBCC is proposing a ₱6.793-trillion national budget for 2026, representing a 7.4 percent increase from the current year’s budget. The proposed budget is equivalent to 22 percent of the country’s gross domestic product (GDP) and aims to sustain infrastructure development and social services.
Infrastructure spending will be maintained at 5 to 6 percent of GDP annually until 2028, ensuring continued improvements in physical connectivity and economic productivity.
Reforms to Strengthen Competitiveness
To reinforce growth and attract more investments, the government is prioritizing the implementation of several newly ratified laws and pending reforms.
“These game-changing reforms are critical to making the Philippines more competitive in trade and investment,” the DBCC said in its statement.
Upper Middle-Income Goal Pushed Back to 2027 — World Bank
Separately, the World Bank said the Philippines is unlikely to reach upper middle-income status by 2025 or 2026, pushing the expected timeline to 2027. The delay is largely due to external shocks, including tighter global trade policies and volatile geopolitical conditions.
“The probable outcome is that it happens around 2027,” said Gonzalo Varela, the World Bank’s lead economist for the Philippines, during a recent economic briefing. While 2026 remains a possibility, he noted that rising global uncertainties make it less likely.
World Bank analysts also warned of weaker performance in exports, industry, and services due to trade disruptions and policy shifts. The growing tensions between Israel and Iran, though not yet reflected in economic forecasts, could further impact global supply chains and drive up commodity prices, senior economist Jaffar Al-Rikabi said.
Reforms Urged to Boost Growth Potential
To counter global headwinds, the World Bank urged the Philippines to accelerate domestic reforms, particularly in:
Tax system modernization
Public spending efficiency
Fiscal deficit reduction
Infrastructure investment
Private sector mobilization
Additionally, the bank emphasized the need for the country to actively pursue regional trade agreements to cushion itself against rising protectionism and shifting global trade dynamics.
“The increase in global uncertainty and trade barriers is an opportunity for the Philippines to double down on domestic reforms,” Varela said. “It’s about reducing the cost of doing business, lowering trade costs, and strengthening ties with regional partners.”
Regional Context: Still Among Top Performers
Despite the downward revision, the Philippines’ projected 5.3 percent growth still places it among the top performers in Southeast Asia. Comparatively, Vietnam is expected to grow 5.8 percent, Indonesia 4.7 percent, Cambodia 4 percent, Malaysia 3.9 percent, and Thailand 1.8 percent, while Myanmar is forecast to contract by 2.5 percent.
