Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan said he is confident Philippine economic growth will hit the lower end of the target this year, despite a slowdown in the third quarter.
“The growth that we are expecting for 2025 is now 5.5 to 6.5% The low-end of the range is still very much achievable,” he told reporters on the sidelines of an event on Oct. 16.
Economic managers will meet next week to assess whether revisions to this year’s growth outlook are needed, he added.
Budget Secretary and Development Budget Coordination Committee (DBCC) Chairperson Amenah F. Pangandaman on Wednesday told BusinessWorld that the gross domestic product (GDP) target for 2025 “remains attainable.”
Finance Secretary Ralph G. Recto earlier said flagged a slowdown in the third quarter and possibly until early 2026 as corruption probes curb public spending.
Aside from slower public spending, Mr. Balisacan said weather disruptions may have dampened economic activity in the July-September period.
“There may be a bit of a slowdown (in third quarter) because of these supply shocks that we have seen. There are so many typhoons that we have seen during the quarter, many days of work suspension. So economic activity is really affected,” he said.
Asked whether third quarter growth could fall below the 5.5% annual GDP growth in the second quarter, Mr. Balisacan said: “Hopefully not.”
However, he noted third quarter growth could have been slower than initially expected earlier this year.
Mr. Balisacan said fourth quarter growth is usually good as consumers spend more during the holidays.
The DepDEV official said the investment component of GDP may have been subdued in the third quarter and may continue to be muted in the coming months amid higher tariffs.
Mr. Balisacan also warned that recent corruption scandals may weigh on investor and consumer confidence, but the impact will likely be short-lived.
Despite these headwinds, Mr. Balisacan said seeing signs of relief, with easing inflation and lower interest rates.
“The effects of falling interest rates months earlier are of course beginning to be felt now because there are usually lagged effects of interest rate changes and investment and consumption decisions,” he said.
The Bangko Sentral ng Pilipinas has cut policy rates by a cumulative 175 basis points (bps) since its easing cycle started in August 2024. Last week, the BSP cut its benchmark rate by 25 bps to 4.75%, and left the door open to further policy easing.
For 2026, Mr. Balisacan said the 6% to 7% GDP growth target remains in place but “things are evolving quite rapidly.”
“We hope that there will be greater clarity and less uncertainty in the coming years,” he said, adding US tariff policy is a major source of uncertainty.
In the same interview, Mr. Balisacan cautioned lawmakers against proposals to grant tax holidays and reduce the value-added tax (VAT), citing that any measures that erode revenues should be “avoided.”
“What we should do is to strengthen and improve the enforcement, implementation of our tax measures to ensure that we’ll achieve the medium-term fiscal framework,” he said.
“Because… not only the credit rating agencies but the investors, domestic and foreign, are watching.”
Several bills have been filed in Congress seeking to either scrap or reduce the VAT rate, and offer a one-month income tax break, amid billion-peso flood control mess. – Aubrey Rose A. Inosante
