PRESIDENT Ferdinand R. Marcos, Jr. said economic targets will must be revised to reflect the impact of the Middle East conflict but stays confident the Philippine economy will grow by 6% by the tip of his term in mid-2028.
“With the war within the Middle East, those (targets) must be redrawn — all the pieces must be redrawn,” Mr. Marcos said in an exclusive interview with Bloomberg Television’s Haslinda Amin in Manila on Tuesday.
“If the war stopped today, the adjustment isn’t going to be immediately back to $70 per barrel. The uncertainty and the shortage of stability goes to factor into that — the overall risk factor remains to be there. And that’s not going to diminish immediately. That’s going to taper off. We hope that it tapers off over a comparatively short period,” he added.
The federal government set a 5-6% gross domestic product (GDP) growth goal for this yr, 5.5-6.5% for 2027, and 6-7% for 2028.
Asked if 6% growth is attainable by 2028, Mr. Marcos replied: “I believe so, yes. We should always find a way to do this.”
Nevertheless, the President said the initial 8% GDP growth goal by 2028 will probably be a “tough number to get to” amid recent shocks.
Mr. Marcos said investments and a young workforce will help drive economic growth.
“We now have restructured even our tax incentives for investors, the benefit of doing business is something we’ve been working hard on… (And) what we at all times consider our best asset is our workforce. We now have a comparatively young workforce… (and) relatively well-trained,” he said.
ABOVE 4% INFLATION
Meanwhile, the Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan said inflation will likely quicken above 4% this yr even under the least severe scenario where oil prices average $100 per barrel for 60 days.
“The federal government is assuming 2-4% for 2026 and beyond, but those are going to be breached in any of those scenarios,” he said during a Senate hearing. “So, we are going to see faster inflation.”
DEPDev sees full-year inflation accelerating to 4% to eight.6% this yr, depending on the typical price of Dubai crude.
It projected that elevated domestic fuel prices combined with the impact of reduced remittances and tourist arrivals, GDP growth may very well be lower by 0.15 to 1.95 percentage points (ppts) to bring full-year growth to between 3.5% and 5.3%.
On the Senate hearing, the DEPDev presented simulations of varied scenarios of the impact of the value of Dubai crude and the duration of the war on the Philippine economy.
It estimated that domestic diesel prices could rise by 33-86% from the prewar baseline estimates in March, 16.5-160% in April and 9.33-176.49% in May.
It projected domestic gas prices could jump by 27-71% in March, by 13.5-133% in April, and seven.63-146.85% in May.
Within the least severe scenario where oil prices average $100 per barrel for 60 days, inflation is anticipated to range from 4.9-5.7% in March and 4.7-5% in April, bringing the full-year average to 4-4.2% for 2026.
Under a scenario where oil averages $100 per barrel for 90 days, inflation may quicken to five.6-6.4% in March and 5.2-5.7% in April, bringing the full-year average to 4.2-4.4%.
Nevertheless, if oil averages $150 a barrel for 90 days, inflation may speed up to 6-7% in March and eight.7-10.6% in April, while the full-year average will settle at 5.1-5.6%.
If $150 per barrel of oil holds for 120 days, inflation may quicken to six.5-7.6% in March and 9.5-11.6% in April, with full-year inflation at 5.5-6.2%.
“These scenarios are scary in the event that they occur because they might bring us to double-digit inflation, which we never had within the last couple of years,” Mr. Balisacan said.
These scenarios assume sustained and heavy damage to the critical infrastructure within the Middle East, he added.
In essentially the most severe scenario when oil would average $200 per barrel for 180 days, inflation may surge to 7.4-8.9% in March and 11.4-14.3% in April, bringing the full-year average to 7.3-8.6%.
Nevertheless, Mr. Balisacan said the likelihood that essentially the most severe scenario will occur is “quite low.”
“The likely source of inflation in the subsequent two years could be non-food because services outputs, for instance, are very much oil-dependent, like transport and logistics,” he said.
“Nonetheless, there’s a significant disruption of fertilizers globally… and that would disrupt local production,” he added.
Under the severe scenario, non-food inflation is anticipated to achieve 8.5-10% in 2026 and 4.7-5.1% in 2027, while food inflation is anticipated to settle at 4.9%-6.1% in 2026 and three.3-3.5% in 2027.
Within the least severe scenario, non-food inflation is projected at 4.4-4.6% in 2026 and three.7-3.8% in 2027, while food inflation is anticipated to be at 3.3%-3.5% in 2026 and a pair of.8-2.9% in 2027.
OFW REMITTANCES
Meanwhile, Mr. Balisacan said that depending on the extent of overseas Filipino employee (OFW) repatriation, the remittances could decline between P63.3 billion and P167.45 billion.
“Remittances, nevertheless, could decline by 41% versus 2025 values, assuming that these scenarios hold, and that may represent 7.5% of the whole remittance, in order that is kind of a pointy decline,” he said.
In 2025, money remittances jumped by 3.3% to a record high of $35.634 billion.
“The faster inflation and the lower remittance inflows resulting from the conflict may drag economic growth by roughly 1.5 to 2 ppts within the worst-case scenario,” said Mr. Balisacan.
Within the severe scenario, GDP growth is anticipated to settle between 3.5% and 4%, while GDP is seen to expand by 5.3-5.35% within the least severe scenario.
To deal with the possible impact of the war on inflation and remittances, DEPDev really useful measures including fuel conservation, fuel subsidies to vulnerable groups, promotion of renewable energy use, encouraging innovation, and enabling infrastructure for lively mobility. — Justine Irish D. Tabile with Bloomberg