President Ferdinand Marcos Jr.’s economic team slashed its fiscal and growth targets through 2028 after the economy’s performance slumped to its weakest pace in more than a decade, underscoring the challenges facing President Ferdinand Marcos Jr.’s ambitious development agenda.

“All of these are interconnected. When you change your targets, the deficits and borrowing also change,” National Socioeconomic Planner Arsenio M. Baliscan told reporters on the sidelines of the gross domestic product (GDP) report for the fourth quarter and full year 2025.

“When we review the macroeconomic profile, all these different pieces are considered together—what level of borrowing will support this kind of growth, and what kind of growth will generate this level of employment and poverty reduction. These factors are all assessed as a whole,” Baliscan added.

Output growth averaged just 4.4 percent in 2025, falling significantly short of the retained target of 5.5 to 6.5 percent. Excluding the Covid-19 pandemic, this was also the slowest pace since 2011, when the economy expanded only 3.9 percent.

The slowdown recalls the Benigno Simeon Aquino III administration, when an anti-corruption drive also led to tighter government spending.

Baliscan said the Cabinet-level Development Budget Coordination Committee (DBCC) has endorsed lower GDP targets of five to six percent for 2026 and 5.5 to 6.5 percent for 2027. The team had previously aimed for annual growth of six to seven percent.

“Obviously, the lower growth for this year and next will affect revenue collections compared with our initial expectations,” he noted.

Recent reports show that economic managers have trimmed the government’s revenue targets, lowering the 2026 goal to ₱4.82 trillion from ₱4.98 trillion. Targets for 2027 and 2028 were also cut to ₱5.12 trillion and ₱5.57 trillion, down 4.5 percent and 5.9 percent from earlier projections, respectively.

“Trying to maintain a high growth rate despite weaker actual performance would have created serious deficit problems,” Baliscan said, explaining the downward revisions in the government’s macroeconomic and fiscal targets.

Under the medium-term fiscal program, the deficit is projected to narrow gradually from 5.7 percent of GDP in 2024 to 5.5 percent in 2025, 5.3 percent in 2026, 4.8 percent in 2027, and 4.3 percent in 2028.