PRESIDENT Ferdinand R. Marcos, Jr. he said the economic target will be they should be updated to reflect the impact of the Middle East conflicts but remains confident that the Philippine economy will grow by 6% by the end of his term in mid-2028.
“With the war in the Middle East, those (targets) have to be redrawn – everything has to be redrawn,” Mr Marcos said in an exclusive interview with Bloomberg Television’s Haslinda Amin in Manila on Tuesday.
“If the war stops today, the correction will not quickly return to $ 70 per barrel. Uncertainty and lack of stability will add to that – the general risk factor is still there. And that will not decrease quickly. That will decrease. We hope that it will decrease in the short term,” he added.
The government has set a target for GDP growth of 5-6% this year, 5.5-6.5% in 2027, and 6-7% in 2028.
Asked if 6% growth is achievable by 2028, Mr. Marcos replied: “I think so, yes. We should be able to do that.”
However, the President said the initial target of 8% GDP growth by 2028 would be a “difficult number to reach” amid the latest shocks.
Mr. Marcos said that investment and youth workers will help to develop the economy.
“We have even restructured our tax incentives for investors, the ease of doing business is something we have been working hard on… (And) something we always consider our biggest asset is our employees. We have young employees… (and) relatively well trained,” he said.
ABOVE 4% INFLATION
Meanwhile, Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan said inflation will likely accelerate above 4% this year even under the worst case scenario where oil prices average $100 per barrel for 60 days.
“The government is taking 2-4% in 2026 and beyond, but those will be breached in any of those circumstances,” he said during a Senate hearing. Therefore, we will see inflation quickly.
DEPDev sees annual inflation rising from 4% to 8.6% this year, depending on the average price of Dubai crude.
It predicted that higher domestic fuel prices combined with the impact of lower remittances and tourist arrivals, GDP growth could decline by 0.15 to 1.95 percentage points (ppts) to bring full-year growth to 3.5% and 5.3%.
At the Senate hearing, DEPDev presented simulations of various scenarios of the impact of the Dubai crude price and the duration of the war on the Philippine economy.
It is estimated that domestic diesel prices may increase by 33-86% from pre-war levels in March, 16.5-160% in April and 9.33-176.49% in May.
It predicted that domestic electricity prices could increase by 27-71% in March, 13.5-133% in April, and 7.63-146.85% in May.
In the worst case where oil prices are between $100 per barrel for 60 days, inflation is expected to range from 4.9-5.7% in March and 4.7-5% in April, bringing the full-year average to 4-4.2% in 2026.
Under the scenario where oil reaches an average of $100 per barrel for 90 days, inflation may quickly reach 5.6-6.4% in March and 5.2-5.7% in April, bringing the full-year average to 4.2-4.4%.
However, if oil averages $150 a barrel for 90 days, inflation may increase to 6-7% in March and 8.7-10.6% in April, while the full-year average will remain at 5.1-5.6%.
If $150 per barrel of oil holds for 120 days, inflation may accelerate to 6.5-7.6% in March and 9.5-11.6% in April, with inflation for the whole year at 5.5-6.2%.
“These situations are scary when they happen because they can bring us to double the income, which we haven’t had in the last few years,” said Mr. Balisacan.
These conditions are causing significant damage to critical infrastructure in the Middle East, he added.
In the worst-case scenario where oil is around $200 per barrel for 180 days, inflation could rise to 7.4-8.9% in March and 11.4-14.3% in April, bringing the full-year average to 7.3-8.6%.
However, Mr. Balisacan said the chances of a more extreme situation occurring are “very small.”
“The most likely source of inflation in the next two years will be non-food because the results of services, for example, are very dependent on oil, such as transport and logistics,” he said.
“Nonetheless, there is a huge shortage of fertilizers around the world … and that can affect local production,” he added.
Under the tough scenario, non-food inflation is expected to reach 8.5-10% in 2026 and 4.7-5.1% in 2027, while food inflation is expected to reach 4.9%-6.1% in 2026 and 3.3-3.5% in 2027.
In the worst case scenario, non-food inflation is expected to be 4.4-4.6% in 2026 and 3.7-3.8% in 2027, while food inflation is expected to be 3.3%-3.5% in 2026 and 2.8-2.9% in 2027.
REMITTANCE OF OFW
Meanwhile, Mr. Balisacan said that depending on the rate of repatriation of overseas Filipino workers (OFW), remittances may drop between P63.3 billion and P167.45 billion.
“Remittances, however, could drop by 41% compared to 2025 levels, assuming these conditions exist, and that would represent 7.5% of total remittances, so that’s a big drop,” he said.
In 2025, remittances jump 3.3% to a record high of 35.634 billion dollars.
“Rapid inflation and lower incomes caused by the conflict may drag down economic growth by about 1.5 to 2 ppts in the worst case scenario,” said Mr. Balisacan.
In the critical scenario, GDP growth is expected to remain between 3.5% and 4%, while GDP is seen growing by 5.3-5.35% in the most critical scenario.
To address the potential impact of the war on inflation and remittances, DEPDev recommended measures including fuel conservation, fuel subsidies for vulnerable groups, promotion of the use of renewable energy, promotion of innovation, and infrastructure that allows for efficient mobility. – Justine Irish D. Tabile with Bloomberg
