While still upbeat about the 2025 growth target, National Socioeconomic Planner Arsenio M. Balisacan flagged a slowdown in government spending and tightening supply as risks that could hamper growth acceleration.

On the sidelines of the European Chamber of Commerce of the Philippines’ (ECCP) European-Philippine Business Dialogue (EPBD), Balisacan noted that hitting the lower end of the downscaled growth target of 5.5 to 6.5 percent remains within reach.

“The low end of the range is still very much achievable. We will see,” Balisacan told reporters on Thursday, Oct. 16.

However, Balisacan noted that if the local economy fails to expand by at least 5.5 percent, it could only fall short by around 0.1 to 0.2 percentage points (ppt). “Statistically, they’re not too different,” he asserted.

“Why do we have to be more pessimistic than what they are seeing for the country? I think what we need to do in government is check on what we can speed up. Because obviously, if there’s a slowdown in government spending, we have to do something about that,” Balisacan argued.

Meanwhile, Balisacan cited supply shocks caused by recent typhoons as a contributor to a moderate slowdown in the local economy.

“There may be a bit of a slowdown because of these supply shocks that we have seen. There are so many typhoons that we have seen during the quarter, many days of work suspension. So economic activity is really affected,” he explained.

He clarified that his expected slowdown is relative to the economic team’s expectations “six months earlier.” Previously, the Cabinet-level Development Budget Coordination Committee (DBCC) had forecast local output to grow by six to 6.5 percent, before adjusting it lower in June.

Historically, Balisacan said, gross domestic product (GDP) growth in the third and fourth quarters shows strong performance.

Despite recent weather disturbances, Balisacan pointed to encouraging developments in consumer price hikes and the continued drop in key borrowing costs set by the Bangko Sentral ng Pilipinas (BSP).

“There are also good developments like inflation has continued to fall. The effects of falling interest rates months earlier are, of course, beginning to be felt now because there are usually lagged effects of interest rate changes on investment and consumption decisions,” he said.

Finance Secretary Ralph G. Recto earlier said the local economy could bear the brunt of the moderation in flood control infrastructure spending. He conceded the Philippines could even fail to hit the goal’s lower end of 5.5 percent.

“These corruption scandals could also impact investment sentiments and consumer sentiments… But we believe that the setbacks are very temporary,” Balisacan said.

Balisacan said that the Philippines, after the unearthing of flood control scandals, could move forward by “putting our house in better order. We can put reforms in place. We can get these institutional processes to address these issues, so we establish a better foundation for long-term growth.”