Context

  • The Development Budget Coordination Committee (DBCC) released a statement June 26 following its review and update of the government’s medium-term macroeconomic assumptions, growth targets and fiscal program for fiscal years 2025-2028. Crafted in response to evolving global and domestic developments, the revisions reflect heightened global uncertainties, including escalating tensions in the Middle East and the imposition of U.S. tariffs.
  • The updated growth projections reflect the government’s recalibrated view of the country’s economic trajectory. Although lower than previous estimates, the revised targets align with current market realities and present a more measured outlook. With the DBCC identifying priority sectors in the 2026 national budget, potential investment opportunities include human capital development such as education, infrastructure under the government’s Build Better More program, digital transformation including e-governance platforms and climate and disaster resilience.

Significance

  • According to the DBCC, the Philippines remains among the fastest-growing economies in Southeast Asia, driven by strong domestic demand. The DBCC aims to strengthen the economy by building on recent reforms such as the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act and the Public-Private Partnership Code. It also seeks to pursue the approval and implementation of other recently ratified reforms by Congress, including the Liberalizing the Lease of Private Lands by Foreign Investors Act, the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, the Accelerated and Reformed Right-of-Way (ARROW) Act and the Konektadong Pinoy Act.
  • The Philippine economy is projected to grow 5.5-6.5 percent in 2025 and 6-7 percent annually from 2026-2028. To support this growth, the government is prioritizing price stability, expanding trade partnerships and improving the productivity of domestic industries. Accelerating the implementation of government programs and projects remains a key priority, along with harnessing growth potential in the services sector.
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Implications

  • The government aims to reduce the fiscal deficit from 5.5 percent of GDP in 2025 to 4.3 percent by 2028 while continuing to boost investments in infrastructure, human capital and social services. Revenue collection is projected to reach 16.3 percent of GDP by 2028, supported by new tax measures, such as the value-added tax under the Nonresident Digital Service Providers Act and Capital Markets Efficiency Promotion Act and improved tax administration, compliance and digitalization. Government disbursements will remain a key growth driver, averaging 21.1 percent of GDP, with infrastructure spending sustained at 5-6 percent of GDP annually. Public investments will also focus on education, health care, agriculture, digitalization and social protection.
  • With the DBCC identifying priority sectors in the 2026 national budget, potential investment opportunities include human capital development such as education, infrastructure under the government’s Build Better More program, digital transformation including e-governance platforms and climate and disaster resilience.
  • The DBCC approved the budget ceiling. However, the Cabinet still needs to approve the proposed 2026 National Expenditure Program, which details how the budget will be divided, prior to its submission to Congress.

We will continue to keep you updated on developments in the Philippines as they occur. If you have any questions or comments, please contact BGA Philippines Managing Director Victor Andres Manhit at vmanhit@bowergroupasia.com.

Best regards,

BGA Philippines Team

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Managing Director

Dindo is recognized as one of Manila’s most well-connected and savvy advisors on developments in government and business in the Philippines. Concurrent to his role as managing director for BGA’s operations in the Philippines, he is also the founder and managing director of the Stratbase Group and president of its policy think tank, the Albert del Rosario Institute for Strategic and International Studies. Since 1991, Dindo has served as a member of the faculty and is the former chair of the Political Science Department and a senior fellow of the La Salle Institute of Governance at the De La Salle ... Read More