Philippine Economy Needs 3.7% Growth in Next 3 Quarters to Hit Annual Target

MANILA, Philippines — The Philippines will need to post at least 3.7 percent growth in the next three quarters to achieve the revised growth target for the year, according to the Department of Economy, Planning and Development (DEPDev). “For us to achieve the 3.5 percent target for the year, average [growth] for last three quarters must be 3.7 percent,” DEPDev Secretary Arsenio Balisacan said in a press briefing yesterday. To achieve the upper-end of this year’s growth goal or 4.5 percent, he said average growth in the next three quarters should be at 5.07 percent. The economy grew by 2.8 percent in the first quarter, the weakest since 2021. Balisacan said that the economy also faced a challenging environment in the second quarter due to the impact of the Middle East conflict. “The first half of 2026 has been challenging. The economy faced a combination of domestic and external shocks that slowed growth and pushed inflation higher,” he said. In particular, the economy continued to feel the effects of the flood control controversy in terms of dampened business and consumer confidence and the slowdown in infrastructure spending. At the same time, the Middle East conflict drove up global oil prices, which translated into higher transport and production costs in the country. He also said that many Filipino families felt the burden of higher prices, while businesses became more cautious amid heightened uncertainty. However, he said improvements are expected in the second half of the year as the government works to address issues on infrastructure-related spending. He also said that a final solution to the Middle East crisis is expected to bring stability to oil prices, which affect other costs. While DEPDev expects inflation to ease in June from the 6.8 percent print in May, he said that it is expected to remain above the Bangko Sentral ng Pilipinas’ two to four percent target for much of the year. To achieve higher growth in the second half, the government’s priorities include restoring confidence, protecting households from price and external shocks, improving long-term productivity and competitiveness and strengthening institutions. While the transition to upper-middle income status is an important milestone, he said that it is not the end of the country’s development journey. He said that the achievement is also an invitation to aim higher and measure progress through a better quality of life for every Filipino. “We should not be happy with just sustaining the current growth of, say, five percent or six percent. We should aim higher, just like what our neighbors are doing,” he said noting that Indonesia and Vietnam are aiming for annual growth of seven percent and 10 percent, respectively. As the country enters this new phase of development, he said that he is optimistic of seeing sustained momentum. He also said that the possibility of going back to lower-middle income class is “quite remote.” “If we stay the course on reforms, strengthen our institutions and continue working together — government, the private sector, civil society, our development partners and the Filipino people — I am confident that we can build an economy that is not only larger, but also more productive, more competitive, more resilient and more inclusive,” he said.