Gradual recovery seen following growth miss

Economic growth is expected to gradually recover this year on the back of increased government spending and exports, a Cabinet official said, following a marked slowdown in 2025.

“[T]he whole year [has] four quarters right?,” Finance Secretary Frederick Go told reporters on Friday.

“We’re not going to get there in the first quarter ... I guess, if we do everything right, it’s progressive. It’s [going] to happen progressively.”

Gross domestic product growth slumped to 4.4 percent in 2025, from 5.7 percent a year earlier, as a massive corruption scandal weighed on spending and sentiment.

The result marked the third year that the government missed its growth targets, although officials have expressed optimism of a rebound beginning 2026.

The target for this year has been lowered to 5.0-6.0 percent from 6.0-7.0 percent to take into account the continued impact of the corruption issue and external uncertainties. That for 2027 was also cut to 5.5-6.5 percent from 6.0-7.0 percent.

Go claimed that foreign investors remained interested in the country and added that exports would play a significant role in boosting economic growth.

“Export actually is the bright spot in all of that, when you look at [gross domestic product] growth,” he said.

Government spending, which slumped in the third and fourth quarters, is expected to improve, and Go said that the Finance and Budget department met earlier this week to clear the amount to be spent for January-March.

“Actually I can give you the number — it’s P1.4 billion for primary spending for the first quarter,” he said.

The “top spenders,” which include the Department of Public Works and Highways, the Department of Education, the Department of Health, the Department of Agriculture and the Department of Transportation, were also present during the meeting.

“We agreed with them what their spending will be, how much money will be released,” Go said.

As for the revenue agencies, he said “The BIR (Bureau of Internal Revenue) has their targets, the BOC (Bureau of Customs) has their targets.”

“I think their targets are achievable — I’m hopeful we will achieve those targets.”

Revenue goals have been lowered given downwardly revised economic growth targets, with the government now aiming to collect P4.824 trillion this year instead of P4.983 trillion.

The target for next year was likewise reduced to P5.122 trillion from P5.366 trillion while in 2028, collections were now projected to reach P5.568 trillion instead of P5.914 trillion.

Based on earlier data, the BIR has been tasked to collect P3.431 trillion, lower than the P3.579 trillion under the 2026 Budget of Expenditures and Sources of Financing.

The BOC goal was likewise reduced to P1.003 trillion from P1.013 trillion. Nontax revenues, on the other hand, were set at a higher P349.9 billion from P249.1 billion.

Both agencies missed their targets last year. The BIR collected P3.105 trillion, short of its P3.232-trillion goal, but this was still above the P2.83 trillion recorded in 2024.

The BOC, meanwhile, generated P934.4 billion, below the P958.7-billion target, although this was again higher than the P916.674 billion collected in 2024. 

Source: Business World