Government cuts 2026 economic growth target to 3.5-4.5% after weak Q1

Weak Q1 expansion of only 2.8% forces government to lower full year target, with officials banking on stronger infrastructure spending and easing inflation to lift growth in the second half.

The government is dialing back its expectations for the Philippine economy after a disappointing start to 2026, cutting this year’s growth target to 3.5-4.5% from the original 5-6%. The revision comes after the economy expanded by just 2.8% in the first quarter, leaving a lot of ground to recover.

That lower target is more than a new forecast. It sets the tone for businesses weighing expansion, companies planning investments, and workers hoping for stronger hiring in the months ahead. A slower economy usually means consumers become more careful with spending, making every peso harder to win.

The government is banking on stronger infrastructure spending, easing inflation, and a rebound in the second half to make up for lost ground, said Economy Planning and Development Secretary Arsenio Balisacan. The Middle East conflict and elevated oil prices have also weighed on the outlook, adding pressure to inflation and business costs.

Likewise, the BSP remains optimistic, saying catch-up government spending could still push growth toward the upper end of the revised target. Whether that happens now depends on how quickly projects move from budget papers to actual construction sites.

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