Government lowers growth target, but optimistic for 2025

MANILA, Philippines — The economic team of the Marcos administration has lowered its growth target for 2024, but adopted a more optimistic outlook for 2025 and beyond.

The Cabinet-level Development Budget Coordination Committee (DBCC) announced at a press briefing yesterday the revised 2024 gross domestic product (GDP) growth target of six to 6.5 percent from the previous six to seven percent goal set in July.

Finance Secretary Ralph Recto said the previous target of seven percent is no longer achievable since it is already December. “I don’t think the economy can grow by seven percent this year,” he said.

The Philippine economy grew by only 5.2 percent in the third quarter, slower than the 6.4 percent in the previous quarter and six percent a year ago. From January to September, growth averaged 5.8 percent.

Budget Secretary and DBCC chairperson Amenah Pangandaman said economic growth is expected to bounce back in the fourth quarter.

“In particular, we expect the Philippine economy to bounce back during the last quarter, given the anticipated increase in holiday spending, continued disaster recovery efforts, low inflation and a robust labor market,” she said.

Growth assumptions for 2025 to 2028 have also been given a wider band of six to eight percent. The Philippines is previously expected to grow 6.5 to 7.5 percent next year.

Pangandaman said the growth targets in the medium-term reflect “the anticipated impact of structural reforms and evolving domestic and global uncertainties.”

National Economic and Development Authority Secretary Arsenio Balisacan highlighted the presence of external headwinds next year, arising from both global and local challenges.

“There are various analyses showing the global economy could move either way with the Trump administration. On one hand, if they pursue what they said they’d do (higher tariffs), that would reduce growth in the US and globally. We’re all part of the supply chain,” he said.

“On the other hand, if the American economy grows, that would benefit the world too. So it goes either way. Plus there are many other disruptions that have characterized the global economy in the last 10 years, so we can take those into account,” Balisacan added.

Recto said with CREATE MORE, the Philippine economy could drive growth to above seven percent next year, but the government assumes the “worst-case scenario” by setting the lower end of the growth target at six percent. CREATE MORE is a newly approved law on tax reforms and broader incentives for businessmen. It stands for Corporate Recovery and Tax Incentives for Enterprises-Maximize Opportunities for Reinvigorating the Economy.

On commodity prices, the DBCC also trimmed down its inflation assumption for 2024 to 3.1 to 3.3 percent from three to four percent previously. This is significantly lower than the six percent average last year.

Inflation is expected to remain within the two to four percent target from 2025 until 2028.

The assumption for the price of the global benchmark Dubai crude was also adjusted to $78 to $81 per barrel from $70 to $85 per barrel this year, considering current market developments. Dubai crude oil is seen to go down slightly to $60 to $80 per barrel next year until 2028.