The Philippines’ economic growth is expected to lag behind government projections over the next two years, according to economists from De La Salle University (DLSU).

“Our model predicts that the government will continue to miss its targets over the next two years as economic expansion moderates to about five to six percent in 2026 (5.6 percent) and in 2027 (5.8 percent),” said economists Jesus Felipe, Mariel Monica Sauler, Gerome Vedeja, and Clarence Gabriel Fernandez in DLSU’s report of the Philippine economy for November 2025, published this week.

To recall, the government, through the Cabinet-level, interagency Development Budget Coordination Committee (DBCC), has set its annual gross domestic product (GDP) growth target at six to seven percent for 2026 to 2028.

“As the government continues to miss its targets, the recent dip in our economic performance must serve as a wake-up call for our policymakers. The government must ensure that something concrete will come out of these investigations,” the DLSU economists said, referring to the flood control controversy.

The economists stressed that “spending on basic infrastructure that facilitate more economic activities must resume at the soonest,” while also urging that reforms should already focus on supporting the manufacturing industry to increase productivity and competitiveness.

They highlighted that the “dip” in third-quarter growth is not surprising, emphasizing that “the confidence of consumers and producers has been severely battered by grave corruption scandals, with investigations showing no clear resolution.”

GDP growth fell sharply to four percent in the third quarter, the slowest quarterly expansion in 4.5 years, mainly as government spending on public goods and services was tempered in the aftermath of the infrastructure corruption scandal.

“The public believes these queries may lead nowhere, as no government officials or private contractors have been held accountable yet. Many institutions are also revising their growth forecasts to below five percent, signaling economic pessimism,” they added.

The DLSU economists also noted that the peso’s decline to a new all-time low could help boost exports and remittances, particularly with the Christmas season drawing near. However, “we do not expect growth to significantly pick up in the last quarter of the year,” they said.

They added that in order to achieve just the lower end of the government’s 2025 growth target, the economy needed to expand by at least seven percent in the fourth quarter—which they believe is impossible given the current political and economic climate.

“Our forecast further shows that growth will jump to 5.1 percent in the fourth quarter of 2025, before closing at five percent in 2025, which is considerably lower than the recently ‘re-revised’ government target of 5.5 to 6.5 percent,” they added.

Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan earlier expressed optimism that following the third-quarter shortfall, the economy is expected to regain momentum, noting that the government is taking steps to recover lost ground. He added that these efforts should be reflected in the fourth-quarter economic performance.

The DLSU economists further added that the recent interest rate cuts by the Bangko Sentral ng Pilipinas (BSP) are unlikely to make a meaningful difference, stressing that looser monetary policy alone cannot revive an economy weighed down by weak consumer and investor confidence.

“Lower interest rates will not boost consumption and investment activities in a country plagued by scandals that feature connivance between politicians and their private funders,” they added.

The government may claim that corruption trials are meant to restore economic confidence, but the DLSU economists said that public trust will improve only when accountability is clearly delivered—something still not evident. Even so, they remain cautiously optimistic, expecting the cases to eventually conclude and the economy to recover, albeit without reaching the country’s seven- to eight-percent growth potential.

They stress that long-term economic growth relies on three key pillars: political stability, a manufacturing-driven economy, and active, corruption-free fiscal policy. So far, they said, the Philippine economy shows little evidence of any of these elements.

“Unless these important foundations are put into place, our economy will grow—but definitely not at the pace we desire,” they added.

(Ricardo M. Austria)