By Aubrey Rose A. Inosante, Reporter
THE PHILIPPINE ECONOMY can still grow throughout the 5.5-6.5% goal this yr as spending is predicted to “normalize” within the fourth quarter, Department of Budget and Management (DBM)Secretary Amenah F. Pangandaman said.
Ms. Pangandaman, who also chairs the Development Budget Coordination Committee (DBCC), said the gross domestic product (GDP) growth goal of 5.5-6.5% for this yr “stays attainable.”
“Spending is predicted to catch up and normalize toward the latter a part of the yr,” she told BusinessWorld in a Viber message on Oct. 15.
“Momentary slowdown in public infrastructure spending is predicted as agencies do due diligence, especially DPWH (Department of Public Works and Highways) because it reviews and evaluates its roster of projects,” she said.
Finance Secretary Ralph G. Recto earlier this week said economic growth likely cooled within the third quarter, adding that the slowdown may proceed until early 2026 as heightened scrutiny over anomalous projects dampens government expenditure.
President Ferdinand R. Marcos, Jr. had flagged anomalous flood control projects during his State of the Nation Address in late July. This sparked several investigations into alleged corruption involving lawmakers, government officials, and personal contractors.
Earlier, Economy Secretary Arsenio M. Balisacan said the DBCC will wait for third-quarter data to be released on Nov. 7 before revising growth targets.
Nevertheless, he noted that achieving the full-year growth goal has “change into harder” as a consequence of a possible slowdown in government spending.
In the primary half, GDP growth averaged 5.4%, slower than 6.2% a yr ago.
Ms. Pangandaman said the economic team stays “vigilant and proactive” in managing fiscal risks while staying aligned with the medium-term fiscal framework.
In June, the DBCC tempered its growth forecast to five.5-6.5% for 2025 and 6-7% for 2026, mainly as a consequence of “heightened global uncertainties” arising from the Middle East conflict and US tariffs.
Ms. Pangandaman said the country’s growth momentum will likely be supported by key aspects, including sound macroeconomic fundamentals, easing inflation, and a lower rate of interest environment.
She also cited favorable credit and financial markets, stronger private sector momentum, and more efficient public spending as driving economic growth.
In a separate statement on Thursday, Mr. Recto said the economy is predicted to post stronger economic growth ahead, citing improved governance and institutional reforms following the flood control mess.
“Growth is being supported by low inflation, easing policy rates, strong consumer spending, and a vibrant labor market,” he said.
Headline inflation averaged 1.7% in the primary nine months of the yr, matching the forecast of the Bangko Sentral ng Pilipinas.
John Paolo R. Rivera, a senior research fellow on the Philippine Institute for Development Studies, said the DBCC might have to revise its macroeconomic assumptions to reflect more realistic conditions amid persistent global headwinds, fragile consumer confidence, and monetary constraints.
The economic managers also needs to prioritize targeted stimulus and institutional reforms to support resilience, he said.
“It’s going to be difficult but not unattainable, despite the third-quarter slowdown,” Mr. Rivera said in a Viber message on Thursday.
“Growth will rely upon whether domestic consumption and investment rebound in the course of the holiday season, if government spending accelerates, and if inflation stays inside goal,” he added.
Ser Percival K. Peña-Reyes, director of the Ateneo Center for Economic Research and Development, said the DBCC should revise its growth targets in light of the corruption scandal over flood control projects.
“Corruption scandals have had a chilling effect on investor sentiment,” he said in a Viber message on Thursday.
Mr. Peña-Reyes said the economy likely expanded by 5.6% within the third quarter, accelerating from 5.2% growth in the identical period a yr earlier.
For the full-year, growth will likely settle at 5.5%, matching the lower end of the federal government’s goal range but slower than the revised 5.7% in 2024.
Foundation for Economic Freedom President Calixto V. Chikiamco said the Philippine economy’s performance is more likely to “disappoint” this yr given the headwinds facing the Philippines.
“The image could possibly be worse next yr when the Trump tariffs begin to bite and global slowdown occurs,” he said in a Viber message.
RECTO REJECTS VAT REDUCTION
As well as, Mr. Recto warned against some lawmakers’ proposals to lower the value-added tax (VAT) rate to 10%, saying this move could lead to “massive revenue losses” and force the federal government to borrow to fund basic operations.
“The whole VAT collection for 2025 of P1.39 trillion can only fund nine months’ price of payroll, premium, and pension of energetic and retired government staff,” said Mr. Recto, who authored the measure that hike the VAT rate in 2005.
Several lawmakers have filed bills in search of to either scrap or cut the 12% VAT rate. VAT collections account for a couple of fifth of the Bureau of Internal Revenue’s total revenues.
Mr. Recto said excise tax collections, projected at P576 billion this yr, wouldn’t be enough to cover the P965-billion budget for basic, tertiary, and technical-vocational education schemes.