By Justine Irish D. Tabile, Senior Journalist
THE PHILIPPINE ECONOMY it may have declined in the first quarter as the long-running Middle East conflict weighed on activity, and growth expected to fall below the latter quarters and miss the governmentyear-round target, Econsaid chief omy.
Economy, Planning, and Development Secretary Arsenio M. Balisacan said the economy is unlikely to reach the 5% to 6% growth target this year due to external shocks and ongoing domestic issues.
“It could be, given this unexpected development,” he told reporters on Wednesday, referring to the US-Israel war against Iran. “And we are trying to recover from the infrastructure issue last year, and then we were again hit by very big problems.”
“It is understandable that you cannot expect it to be better than what you had in the previous quarters, given these shocks,” he added.
The economy is set to grow by 4.4% in 2025 – the slowest pace in five years – weighed down by a weak investment climate after a corruption scandal linked to flood control projects. This debate affects the government officials, lawmakers and contractors, undermines business confidence.
Mr. Balisacan said that global conditions have worsened, citing forecasts of a slowdown in growth from affiliated institutions.
“The global picture shows that the expected growth is reduced,” he said, citing the forecasts of the World Bank and the International Monetary Fund (IMF).
The World Bank and the IMF cut their 2026 growth forecasts for the Philippines to 3.7% and 4.1%, respectively.
The Development Budget Coordinating Committee (DBCC) is expected to review its macro budget target after the release of first-quardata scheduled for May 7.
“Our practice is to do that review as soon as we have the economic performance report … maybe a week or two after that,” said Mr. Balisacan.
The DBCC lowered its growth targets in December to reflect the impact of the infrastructure crisis, setting a target of 5% to 6% for 2026 from 6% to 7%.
Rising oil prices due to the war in the Middle East added pressure to the economy. The Philippines, which relies heavily on imported fuel, has been hit by high electricity costs and tight supply conditions.
The government declared a one-year national energy emergency and suspended excise duties on kerosene and liquefied petroleum gas to minimize the impact on consumers.
“Most of our fuel needs… come from the Middle East, directly or indirectly,” Mr. Balisacan said. “Therefore, we are affected by shock.”
The authorities have issued targeted subsidies and support measures to reduce the impact on vulnerable sectors.
“So, what we’ve been doing… is making sure the economy doesn’t slow down too much because of this shock,” he said, adding that protecting low-income households remains a priority.
Despite the challenges of the near term, Mr. Balisacan expressed confidence in the recovery once the external pressures have subsided.
“But the most important thing is that we will be able to recover as soon as this shock is over,” he said.
The Philippines remains dependent on fossil fuels, with renewable energy making up only 26% of the electricity mix – close to the government’s goal of 35% by 2030.
And on Wednesday, the Asian Development Bank (ADB) said that the economies of Asia and the Pacific, including the Philippines, should prioritize stability over suppressing price signals amid rising energy costs.
“Allowing higher electricity prices to pass, at least in part, would encourage energy conservation, fuel switching and investment in alternative energy sources,” it said in the policy document.
The multilateral lender said financial support should be targeted and timely, starting first with vulnerable households and the most affected industries.
ADB also cautioned against aggressive policy tightening, warning that it could exacerbate stressors and escalate. financial market volatility.
It said governments could consider practical measures such as temperature mandates and incentives to use public transport to reduce energy use.
In its April Asian Development Outlook, ADB lowered its 2026 growth forecast for the Philippines to 4.4% from 5.3%.
It also lowered its growth estimate for Asia and the Pacific to 4.7% from 5.1%, reflecting broader economic headwinds.
