Economy, Planning, and Development Secretary Arsenio M. Balisacan has expressed confidence that the Philippine economy can accelerate to a growth rate of 5.5 percent to 6.5 percent after downscaling from the more ambitious growth target previously.

Despite concerns of slower household consumption, Balisacan said expanding anywhere within the fresh, lower target is comfortable. According to Balisacan, growing within targets should be attainable now as key borrowing costs have been reduced several times, and inflation has been hitting its lows.

“So the time lag usually is anywhere from a quarter to three quarters. So we should be already getting some of the dividends from past policy rate reduction, and the inflation is coming down from a high of eight percent in early last year to just 1.9 percent now,” the Balisacan told reporters during the Cabinet-level Development Budget Coordination Committee (DBCC) press briefing.

Since the kick-off of the monetary policy easing cycle in August last year, the Bangko Sentral ng Pilipinas (BSP) has so far slashed a total of 125 basis points (bps) to 5.25 percent from 6.5 percent prior to the easing cycle. May’s 1.9-percent inflation rate was the slowest in five-and-a-half years since November 2019.

“We also see that the labor market remains quite robust and remittances have continued to show positive growth despite the volatility,” Balisacan noted, adding that the Philippine growth should perform well in the second half of 2025 “unless you see some explosion or some drastic developments in the Middle East.”

On Thursday, June 26, the economic team has announced the downward revision of gross domestic product (GDP) growth target as it is expected to moderate in an environment where the exports sector is seen to contract due to the tariff imposed by United States (US) President Donald Trump to the Philippine exports.

While slapped with tariffs, HSCB ASEAN economist Aris Dacanay has projected the Philippine economy to become the fastest-growing economy among the member-countries of the Association of Southeast Asian Nations (ASEAN)—exceeding Vietnam, the region’s best performer.

Prior to the DBCC announcement, Dacanay revised his GDP growth forecast to 5.4 percent this year, from 5.9 percent previously.

Although significantly slower than his previous forecast, the Philippines is poised to become the fastest growing economy in ASEAN, as Vietnam is seen to only expand by 5.2 percent. The revised forecast for Vietnam was a massive drop from 6.5 percent previously.

According to Dacanay, the trend where the Philippines leads the region will continue until next year, as he sees the local economy growing by 5.8 percent, while the Vietnam economy is seen to accelerate at 5.6 percent.

Dacanay explained that Vietnam’s trailing behind the Philippines for 2025 until 2026 is due to Vietnam’s relatively higher exposure to Trump tariffs. Meanwhile, the Philippines has “the least exposure.”