By Justine Irish D. Tabile, Senior Reporter
THE PHILIPPINE ECONOMY likely slowed in the primary quarter because the prolonged Middle East war weighed on activity, with growth expected to fall below recent quarters and miss the government’s full-year goal, the Economy chief said.
Economy, Planning, and Development Secretary Arsenio M. Balisacan said the economy is unlikely to fulfill the 5% to six% growth goal this yr on account of external shocks and lingering domestic issues.
“It could be, given this unexpected development,” he told reporters on Wednesday, referring to the US-Israel war on Iran. “And we’re attempting to recuperate from the infrastructure issue last yr, after which we’re hit again by much more serious problems.”
“It’s comprehensible that you could’t expect it to be higher than what you had in previous quarters, given these shocks,” he added.
The economy grew 4.4% in 2025 — the slowest in five years — weighed down by weaker investment sentiment after a corruption scandal tied to flood control projects. The controversy implicated government officials, lawmakers and contractors, dampening business confidence.
Mr. Balisacan said global conditions have also worsened, citing downgraded growth forecasts from multilateral institutions.
“The worldwide picture shows that growth expectations have been reduced,” he said, citing forecasts by the World Bank and International Monetary Fund (IMF).
The World Bank and IMF trimmed their 2026 growth forecasts for the Philippines to three.7% and 4.1%, respectively.
The Development Budget Coordination Committee (DBCC) is anticipated to review its macroeconomic targets after the discharge of first-quarter data scheduled for May 7.
“Our practice is to do those reviews as soon as we’ve got the economic performance report… perhaps per week or two after that,” Mr. Balisacan said.
The DBCC had lowered its growth targets in December to reflect the impact of the infrastructure controversy, setting a 5% to six% goal for 2026 from 6% to 7%.
Rising oil prices on account of the Middle East war have added pressure on the economy. The Philippines, which relies heavily on imported fuel, has been hit by higher energy costs and tighter supply conditions.
The federal government declared a one-year state of national energy emergency and suspended excise taxes on kerosene and liquefied petroleum gas to cushion the impact on consumers.
“Most of our fuel needs… come from the Middle East, directly or not directly,” Mr. Balisacan said. “So, we were affected by the shocks.”
Authorities have rolled out targeted subsidies and support measures to mitigate the impact on vulnerable sectors.
“So, what we’ve got been doing… is to be sure that the economy will not be severely slowed down by this shock,” he said, adding that protecting low-income households stays a priority.
Despite near-term challenges, Mr. Balisacan expressed confidence in a recovery once external pressures ease.
“But a very powerful thing is that we’ll find a way to recuperate as soon as this shock is over,” he said.
The Philippines stays reliant on fossil fuels, with renewable energy accounting for less than 26% of the facility mix — near the federal government’s 35% goal by 2030.
Also on Wednesday, the Asian Development Bank (ADB) said economies in Asia and the Pacific, including the Philippines, should prioritize stabilization over suppressing price signals amid rising energy costs.
“Allowing higher energy prices to go through, no less than partially, can encourage energy conservation, fuel switching and investment in alternative energy sources,” it said in a policy transient.
The multilateral lender said fiscal support needs to be targeted and time-bound, with priority given to vulnerable households and heavily affected industries.
The ADB also cautioned against aggressive policy tightening, warning that it could worsen growth pressures and heighten financial market volatility.
It said governments might consider demand-side measures equivalent to temperature mandates and incentives for public transport use to curb energy consumption.
In its April Asian Development Outlook, the ADB lowered its 2026 growth forecast for the Philippines to 4.4% from 5.3%.
It also cut its growth projection for Asia and the Pacific to 4.7% from 5.1%, reflecting broader economic headwinds.