Malacañang expressed confidence that the Philippine economy will post stronger growth in the second half of the year despite the government's decision to lower its gross domestic product (GDP) growth forecast for 2026.

Presidential Communications Office (PCO) Undersecretary Claire Castro said this after the Development Budget Coordination Committee (DBCC) recently lowered its GDP growth forecast for 2026 to 3.5 percent from 4.5 percent, below the government's original target of five to six percent.

In a press briefing on Thursday, June 25, Castro said the government's economic managers expect economic activity to improve as infrastructure spending accelerates following earlier delays in budget implementation.

"Ang sabi po sa atin, since ngayon po gumaganda na po ang paggastos sa imprastraktura. Nakikita niyo naman po. So nakikita po second half, this year, ay malamang magkaroon na po ng konting improvement (We were told that infrastructure spending is now improving, as you can see. So, in the second half of this year, we are likely to see some improvement),” she said.

Castro said the downgrade was driven by external and domestic factors, particularly the global oil crisis and the government's decision to exercise greater caution in releasing funds for infrastructure projects.

"Ang nangyari po kasi dito, dahil mayroon tayong kinaharap na global oil crisis at yun po ang nakikita ng economic team natin kung bakit nagkaroon ng ganitong sitwasyon (What happened was that we were confronted with a global oil crisis, and our economic team sees this as one of the reasons for the current situation),” she said.

She added that infrastructure spending slowed after the administration tightened its review of projects following the controversy surrounding alleged anomalous flood control projects.

“Hindi agad gumastos ang gobyerno. Pinag-aralan mabuti at hindi basta-basta inilabas ang pondo (The government did not immediately spend. Funds were carefully reviewed and were not released hastily),” Castro said.

“Isa po ito sa naging dahilan kung bakit medyo humina po ang growth ng ekonomiya ng bansa (This was one of the reasons why the country's economic growth slowed somewhat),” she added.

Castro said Department of Budget and Management (DBM) Secretary Kim de Leon believes the government now needs to increase spending, particularly on infrastructure, while maintaining safeguards against misuse of public funds.

“Ngayon sa pamumuno ni Secretary Kim de Leon, maliban po sa pag-iingat, kailangan na po talagang gumastos lalong-lalo na sa imprastraktura (Now, under the leadership of Secretary Kim de Leon, aside from exercising caution, the government really needs to spend, especially on infrastructure),” she said.

She added that infrastructure expenditures had declined because of the government's review of flood control projects.

Quoting De Leon, Castro said the government would continue pursuing strategic investments to support long-term economic growth.

"The government recognizes that recent external and domestic developments, including geopolitical uncertainties and the need to strengthen governance and quality in infrastructure implementation, require a measured policy response," she quoted the Budget chief as saying.

"Looking ahead, the government intends to pursue strategic, high-quality public investments supported by stronger project preparation, integrated infrastructure master planning, and improved budget execution to sustain long-term growth," De Leon added.

Castro also acknowledged that the ongoing conflict in the Middle East continues to affect the country's economic outlook.

"Hindi pa rin po kasi natatapos ang krisis sa Middle East, kahit anong gawin po natin sa ngayon, nakakaapekto pa rin po siya—maliban pa po sa mga political noise na nararanasan natin sa ngayon (The crisis in the Middle East has not yet ended. Whatever we do now, it continues to affect us, aside from the political noise we are experiencing),” she said.