Global anxiety dampens Philippine prospects for 2025

Sec. Arsenio Balisacan (Senate Public Relations and Information Bureau)

MANILA, Philippines — The Marcos administration could temper its macroeconomic goal this year to account for the impact of global trade uncertainties in the near-term.

That was according to Secretary Arsenio Balisacan of the Department of Economy, Planning and Development, who also hoped that the winners of the recent midterm elections could help the government enact “long-lasting” reforms that could make the economy more resilient to external headwinds.

Speaking to reporters, Balisacan said the upper limit of the state’s 6 to 8 percent growth target for 2025 could be downwardly adjusted to reflect the challenges that the Philippines and the rest of the world were facing due to heightened trade uncertainties.

He did not say how low the potential adjustments can go. Balisacan is the vice chair of the Development Budget and Coordination Committee, which sets the macroeconomic and fiscal targets of the government. That said, any tweaks to the growth goals could also affect government budget planning and preparations.

READ: Marcos administration still ‘optimistic’ on hitting 6-8% growth target

Too early to give up

But Balisacan nevertheless remains optimistic that the economy could grow between 6 to 8 percent in the remaining years of President Marcos’ term.

“My sense is that it’s too early to give up 6 to 8 percent for the medium term, meaning 2025 to 2028. I’m always an optimist,” he said.

“We have to be ambitious. We have been left behind so far by our neighbors. If you don’t push very hard to work on a more rapid growth, you’ll always be kulelat (a laggard),” he added.

Latest data showed gross domestic product (GDP) had expanded by 5.4 percent year-on-year in the first three months. That was slightly faster than the 5.3 percent growth in the preceding quarter, but weaker than the 5.9 percent clip recorded in the same period last year.

READ: Slower than expected: Philippine GDP grows by 5.4% in Q1

At the same time, the figure fell short of the 5.9 percent median estimate of 12 economists polled by the Inquirer.

Analysts said the specter of global trade war had bruised business confidence. Gross capital formation—the investment component of the GDP—grew by 4 percent in the three months ending in March, slowing down from 5.5 percent in the preceding quarter.

Dovish hopes

For now, economists believe that the ongoing interest rate cuts of the Bangko Sentral ng Pilipinas (BSP) could help investments make a bigger contribution to the overall economic growth.

“GDP growth could settle close to the low end of the government’s growth targets for 2025 to 2027. Domestic economic activity may benefit from disinflation but faces downside risks,” the BSP wrote in a report showing the highlights of the April 2025 rate-setting meeting of the Monetary Board.

READ: BSP cuts policy rate by 25 bps to 5.5%

Moving forward, Balisacan said the Marcos administration would work hard to sell its proposed reforms to the new members of Congress, while being “more strategic” in terms of timing amid a looming impeachment trial of Vice President Sara Duterte, which could potentially take away so much time from lawmaking.

“We obviously would take that (impeachment trial) into account given that in the [remaining] three years, what can we realistically accomplish? I’m looking at reforms with long-lasting, impactful benefits,” he said.