Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan said he’s confident Philippine economic growth will hit the lower end of the goal this 12 months, despite a slowdown within the third quarter.
“The expansion that we expect for 2025 is now 5.5 to six.5% The low-end of the range remains to be very much achievable,” he told reporters on the sidelines of an event on Oct. 16.
Economic managers will meet next week to evaluate whether revisions to this 12 months’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) goal for 2025 “stays attainable.”
Finance Secretary Ralph G. Recto earlier said flagged a slowdown within the third quarter and possibly until early 2026 as corruption probes curb public spending.
Other than slower public spending, Mr. Balisacan said weather disruptions can have dampened economic activity within the July-September period.
“There could also be a little bit of a slowdown (in third quarter) due to these supply shocks that we’ve seen. There are such a lot of typhoons that we’ve seen in the course of the quarter, many days of labor suspension. So economic activity is actually affected,” he said.
Asked whether third quarter growth could fall below the 5.5% annual GDP growth within the second quarter, Mr. Balisacan said: “Hopefully not.”
Nevertheless, he noted third quarter growth might have been slower than initially expected earlier this 12 months.
Mr. Balisacan said fourth quarter growth is frequently good as consumers spend more in the course of the holidays.
The DepDEV official said the investment component of GDP can have been subdued within the third quarter and should proceed to be muted in the approaching months amid higher tariffs.
Mr. Balisacan also warned that recent corruption scandals may weigh on investor and consumer confidence, however the impact will likely be short-lived.
Despite these headwinds, Mr. Balisacan said seeing signs of relief, with easing inflation and lower rates of interest.
“The results of falling rates of interest months earlier are after all starting to be felt now because there are often lagged effects of rate of interest 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 began 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 goal stays in place but “things are evolving quite rapidly.”
“We hope that there will probably be greater clarity and fewer uncertainty in the approaching years,” he said, adding US tariff policy is a significant source of uncertainty.
In the identical 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 ought to be “avoided.”
“What we should always do is to strengthen and improve the enforcement, implementation of our tax measures to make sure that we’ll achieve the medium-term fiscal framework,” he said.
“Because… not only the credit standing agencies however the investors, domestic and foreign, are watching.”
Several bills have been filed in Congress looking for 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