President Ferdinand R. Marcos Jr.’s outgoing chief economic manager has conceded that the country’s full-year gross domestic product (GDP) growth for 2025 could fall to as low as 4.7 percent, even as he expects stability in consumer price movements to support further easing in key borrowing costs to revive the struggling economy.

In a statement on Monday, Nov. 17, outgoing Department of Finance (DOF) Secretary Ralph G. Recto said he expects output to expand by 4.7 to 4.8 percent this year, well below the target of 5.5 to 6.5 percent.

On Monday afternoon, the Palace announced that Recto will become the new Executive Secretary, after Lucas Bersamin resigned. The President also accepted the resignation of Budget Secretary Amenah F. Pangandaman, according to a Palace press briefing.

Recto’s outlook implies that it has become nearly impossible for the local economy to hit the lower-bound growth target of 5.5 percent.

Excluding the 9.5-percent GDP contraction during the Covid-19 pandemic in 2020, the former DOF chief’s projected growth for the year would be the slowest since 2011, when the economy expanded by just 3.9 percent—a déjà vu of the era when former President Benigno Simeon Aquino III also launched an anti-corruption campaign that tightened government spending.

To recall, economic growth sharply slowed to a 4.5-year low of four percent in the third quarter due to alleged corruption in public infrastructure funds. The unearthing of large-scale corruption in the flood control budget prompted a tightening of government infrastructure spending.

Meanwhile, Recto added that steady price movements since January signal a green light for the Bangko Sentral ng Pilipinas (BSP) to trim the current 4.75-percent policy rate by a quarter-point. As DOF chief, Recto represented the President on the Monetary Board (MB), the BSP’s highest policy-setting body.

Recto said the real interest rate—the key borrowing cost adjusted for inflation—is seen settling at only 3.3 percent.

“That means we have more than enough capacity to pay what we owe, and our debt remains manageable, stable, and sustainable for the long run,” Recto said.

Lowering key lending costs is expected to bolster private consumption, which would, in turn, accelerate economic growth. Inflation held steady at 1.7 percent in October, matching its average pace for the first 10 months.

Wage and salary workers remained the largest segment of the labor force, accounting for 64.1 percent or 31.8 million of the 49.6 million employed. The DOF said this reflects “the economy’s ability to generate secure livelihoods.”

“Above all, we assure the Filipino people that our fiscal consolidation path is on track, and everything moving forward is on the upside. We will bring down our deficit and debt gradually, while creating more jobs, increasing our people’s income, and lifting more Filipinos out of poverty,” the DOF said.

“We are also intensifying our fight against tax evasion and smuggling. The Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) will aggressively pursue major cases with time-bound investigations and swift prosecution. No delays. No exemptions. No sacred cows. We will see results.”

To accelerate economic growth, the DOF said the economic team is implementing “a comprehensive catch-up plan.”

Government revenues are projected to reach ₱4.52 trillion by the end of 2025, or 15.9 percent of GDP, which is nominally estimated at ₱28.36 trillion. Total government spending is seen at ₱6.08 trillion.

Meanwhile, the fiscal deficit is expected to reach ₱1.56 trillion, equivalent to 5.5 percent of total output.