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The Philippines can still achieve its 6-7% gross domestic product (GDP) growth target this year, National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said on Friday.

“We remain optimistic about the fourth quarter economic performance. Holiday spending, more stable commodity prices, robust remittance inflow, and labor market give us confidence that our 6 to 7% growth target is still achievable,” he said during a press conference on Friday.

Mr. Balisacan said fourth quarter GDP growth will likely be faster than the third quarter, amid easing inflation and lower interest rates.

“I think all these, we believe that the fourth quarter could be better than the third quarter,” he said.

Mr. Balisacan said these “positive forces” could outweigh the expected contraction in agricultural output due to weather disturbances.

In the third quarter, GDP expanded by 5.2%, as bad weather hurt agricultural output and slowed government spending. This was slower than the revised 6.4% in the second quarter and and 6% a year ago.

It was also the weakest growth in five quarters or since the 4.3% expansion in the second quarter of 2023.

For the first nine months, GDP growth averaged 5.8%. The economy has to grow by 6.5% in the fourth quarter in order to reach the lower end of the government’s 6-7% target for 2024.

Mr. Balisacan said that even if Philippine GDP expands by an average of 5.9% to 6.1% for the full year, this would still be a “very respectable growth” compared to most emerging economies.

For 2025, Mr. Balisacan said the economy will likely benefit from rate cuts by the Bangko Sentral ng Pilipinas’ (BSP).

Since starting its easing cycle in August, the BSP has cut borrowing costs by 50 basis points, bringing the benchmark rate to 6%.

Trump impact

Meanwhile, Mr. Balisacan said the Philippines is “ready to work with any economy” as Donald J. Trump is set to assume the presidency in the United States in January.

He said the Philippines will adjust its policies accordingly as it continuously built “solid” relationships with the US and other countries.

Mr. Trump has proposed to impose 60% tariffs on US imports of Chinese goods, as well as a universal tariff of up to 20%.

“The best hope we could make is that what was stated during the campaign would be different from what will actually happen. So that we won’t get into these high tariffs, increasing tariffs,” he said.

It would be “bad” for the global economy as a whole as it could reduce trade, inflows, and more, Mr. Balisacan said.

“We expect that we hope that we won’t go there, but still our priority, even before this development and as reflected in our PDP [Philippine Development Plan], is to diversify the economy so that we have all these growth pillars kicking in,” he said. — Aubrey Rose A. Inosante

The National Economic and Development Authority (NEDA) on Thursday said rising political tensions in the Philippines will have minimal, if any, impact on the economy.

The Philippine government is focused on upgrading infrastructure, boosting the country’s resiliency in the face of climate change, and diversifying its economy amid geopolitical risks, NEDA added.

It’s “business as usual,” NEDA Secretary Arsenio M. Balisacan said at a Palace briefing after attending a Cabinet meeting that largely focused on the prospects for the 2025 national budget.

He said the business community is more concerned with the sustainability of the country’s economic agenda.

“As also seen in recent economic history, for so long the government stays in course within its development economic priorities and programs, this will continue to maintain their confidence in the economy,” he added.

“So, I think the impact of [political] noises such as what we have now, if there’s anything, will be quite minimal and the last 12 or so years bear on that.”

Due largely to the impacts of weather disturbances and slower government spending, the Philippine economy grew by 5.2% in the third quarter — the weakest in five quarters.

President Ferdinand R. Marcos, Jr. on Monday vowed to fight back and never to allow the country to be dragged into gutter-level politics. This after his erstwhile ally and Vice-President Sara Z. Duterte-Carpio claimed she hired an assassin to kill the President, his wife and  House Speaker Ferdinand Martin G. Romualdez.

Ms. Duterte on Wednesday said her broken ties with the President’s camp had reached a “point of no return.”

The country’s second-highest official has been grumbling amid congressional probes into confidential funds at the Office of the Vice-President and the Department of Education.

Mr. Balisacan claimed that since the late 1990s, the Philippine economy “continued to progress despite the political noises.”

“In this administration, we are so focused on ensuring that the goals and targets and strategies that we have outlined in the Philippine Development Plan will be achieved,” he said.

Mr. Balisacan said it is important for the public to know that economic momentum is sustained.

“We can do ‘business as usual’ amid conflicts between former political allies. Indeed, it may not translate to macroeconomic disturbances, but it would affect our image among global partners which could be potential sources of investment,” said Emy Ruth Gianan, who teaches economics at the Polytechnic University of the Philippines.

“More importantly, it adversely affects the morale of ordinary Filipinos. They would eventually choose to leave the country given petty political fights,” she said in a Facebook Messenger chat.

Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said amid all the dramas, the major issue remains the same — “that the root cause was the misuse of public funds, otherwise known as confidential funds.”

“Sure, the government is focused on the economy. But the key issue is trust,” he said via Messenger chat.

“The loss of P125 million of confidential money in 11 days should be already a cause of concern for the economic managers, and its consequences cannot be offset by future committed work especially if no one is being held accountable for it.”

Terry L. Ridon, a public investment analyst and convenor of InfraWatchPH, said rising political tensions can create an “atmosphere of instability” from the point of view of the international community.

“This may compel foreign investors to reconsider the Philippines as its next investment destination and rechannel their funds towards economies with a more stable political status quo,” he added.

“Nonetheless, Congress and the President should resolve this political instability in the soonest time, whether through impeachment proceedings or through legal proceedings being initiated by various government agencies.”

‘More stable’

Mr. Balisacan said the economic meeting with Mr. Marcos earlier in the day largely focused on the 2025 national budget and “the need to prioritize the funding of the high-priority projects.”

Mr. Romualdez and Senate President Francis Joseph “Chiz” G. Escudero were present at the meeting.

Mr. Balisacan said the Congress vowed to cooperate with the Executive branch in ensuring funding for its flagship projects for next year.

Asked whether this would mean new taxes, the NEDA chief said: “It’s the same. We haven’t changed the priorities with respect to new measures.”

He said the Legislative-Executive Development Advisory Council will convene in two weeks.

Mr. Balisacan said the President has instructed the economic team to “tighten our practices” in releasing rules and guidelines for infrastructure projects to ensure that they can withstand the floods and typhoons.

Aside from infrastructure, the economic team is also focused on the need to “diversify the economy and to strengthen its fundamentals,” the NEDA chief said, citing “threats of high tariffs and the possible responses of other countries to such tariffs.”

US President-elect Donald J. Trump seeks 60% or higher tariffs on all Chinese goods and a 10% universal tariff.

“I think that over the years, and I’m quite confident, that our economy now is more stable than any other time in the past, that it’s more diversified than actually in the past but we need to continue and improve working and developing other pillars of growth,” Mr. Balisacan said.

Also on Thursday, Mr. Balisacan said NEDA was set to submit its periodic review of the reduced tariff rate for rice on Friday.

“It basically presents the picture of the rice market at this time, providing an analysis of where we are, particularly with respect to production, to supply, to demand, to prices and what to expect in the coming four months and beyond,” he said. – Kyle Aristophere T. Atienza, Reporter

The national government’s fiscal position swung to a surplus in October, driven by a 23% jump in revenues, the Bureau of the Treasury (BTr) said on Wednesday.   

The NG posted a PHP 6.3-billion budget surplus in October, a turnaround from the PHP 34.4-billion deficit in the same month a year ago.

This was the first budget surplus since the PHP 42.7-billion surplus posted in April.

Month on month, the budget balance swung to a surplus from the PHP 273.2-billion deficit in September.

Data from the BTr showed government revenues increased by 22.63% to PHP 473.1 billion in October from PHP 385.8 billion a year ago, as tax revenues jumped by 16.94% to PHP 414.9 billion.

The bulk of tax revenues came from the Bureau of Internal Revenue (BIR), which collected PHP 325.5 billion in October, up 18.62% year on year.

“The double-digit growth in October can be attributed to higher collections on value-added tax (VAT), personal income tax (PIT), documentary stamp tax (DST), corporate income tax (CIT), excise tax on tobacco products, and percentage taxes,” BTr said.

Collections by the Bureau of Customs jumped by an annual 11.5% to PHP 86.9 billion in October, while collections by other offices were flat at PHP 2.4 billion.

On the other hand, non-tax revenues also went up by 87.65% year on year to PHP 58.3 billion in October. Treasury revenues declined by 13.5% to PHP 14.5 billion, due to “the base effect of early remittances of dividends from government-owned and -controlled corporations last year.”

Collections by other offices surged by 206.72% to PHP 43.7 billion.

Meanwhile, expenditures rose by 11.08% to PHP 466.8 billion in October from PHP 420.2 billion a year ago.

“This was mainly attributed to higher personnel services expenses due to the first tranche of the salary adjustments of qualified civilian government employees and the release of FY 2022 Performance-Based Bonus of the Department of Education,” it said.

Spending also got a boost from the implementation of infrastructure projects of the Department of Public Works and Highways and foreign-assisted rail projects of the Department of Transportation, as well as social protection and health programs.

Interest payments slipped by 6% to PHP 55.4 billion, while other expenditures jumped by 13.89% to PHP 411.4 billion.

“Budget surplus (in October) may stem from low budget utilization rate of several agencies due to various factors such as procurement and disbursement issue,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.

10-month deficit

In the first 10 months, the budget deficit narrowed to PHP 963.9 billion from PHP 1.02 trillion in 2023.

As of end-October, the shortfall represents only 64.94% of the PHP 1.48-trillion deficit ceiling for the year.

Revenue collections jumped by 16.83% to PHP 3.77 trillion in the January-to-October period. This accounted for 88.2% of the revised PHP 4.27-trillion revenue program for this year.

Taxes, which made up 86% of the total revenues, increased by 11.4% to PHP 3.23 trillion.

Revenues generated by the BIR rose by 13.49% to PHP 2.42 trillion as of end-October, making up 84.95% of the PHP 2.85-trillion revised full-year program.

“The 10-month year-on-year growth is due to higher VAT, a total of 12 months’ worth of VAT was already collected with the change of filing schedule from monthly to quarterly. The other sources of higher BIR collection are PIT, CIT, combined taxes on bank deposits and government securities, DST, and percentage taxes,” the Treasury said.

Customs collections went up by 5.32% to PHP 777.6 billion, representing 82.75% of the revised PHP 939.7-billion program.

Nontax revenues, which accounted for 14.32% of the total revenues, jumped by 64.93% to PHP 539.4 billion.

On the other hand, expenditures increased by 11.52% to PHP 4.73 trillion in the first 10 months from PHP 4.24 trillion in the comparable period last year.

Interest payments rose by 23.03% to PHP 638.7 billion from PHP 519.1 billion a year ago.

“The better budget balance data for the month of October 2024 and for the first 10 months of the year may be attributed to faster growth in recurring tax revenues especially from the BIR as the economy reopened further,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He said many businesses reported improved sales, which resulted in higher tax revenue collections.

“Going forward, the CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) would lead to some foregone tax revenue collections,” he said.

But this could be offset “by increased foreign direct investments, more jobs, and increased business/economic activities in the country that would result in more recurring tax revenue collections,” Mr. Ricafort said.

The Treasury said revenue effort for the first three quarters improved to 17.5% of gross domestic product (GDP), slightly higher than 16.4% a year ago and exceeded the 16.1% target for 2024.

Tax effort also went up to 14.91% in the first three quarters versus 14.72% in 2023, and above the 14.42% full-year target.

Expenditure effort rose to 22.6%, up from 22.13% a year ago and surpassed the full-year target of 21.72%.

“The fiscal deficit-to-GDP ratio stands at a manageable 5.14% of GDP for the first three quarters of 2024. This is lower than the 5.7% level during the same period last year and well below the 5.6% target for 2024,” the Treasury said. – Aubrey Rose A. Inosante, Reporter

S&P Global Ratings affirmed the Philippines’ investment grade rating on Tuesday and raised its outlook to “positive” from “stable” to reflect the economy’s strong growth potential amid improved institutional strength on the back of “effective policy making.”

The debt watcher on Tuesday affirmed its “BBB+” long-term credit rating for the country, which is a notch below the “A” level grade targeted by the government. It also kept its “A-2” short-term rating for the Philippines.

Still, S&P Global raised its rating outlook to “positive” from “stable.” A positive outlook means the Philippines’ credit rating could be raised over the next two years if improvements are sustained.

“Our improved institutional assessment drives our positive outlook on the Philippines. We believe the strengthening of the country’s institutional settings, which had contributed to a significant enhancement in the sovereign’s credit metrics over the past decade, will continue,” S&P Global said in a statement. “This is demonstrated by the strong economic recovery in the last two years, and ongoing reforms to support business and investing conditions.”

“This improvement could lead to stronger sovereign support over the next 12-24 months if the Philippines’ economy maintains its external strength, healthy growth rates, and that fiscal performance will strengthen.”

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. said the debt watcher’s upgraded outlook “reflects the work the government has done to improve the economic, fiscal, and monetary environment, enabling strong growth to continue.”

Finance Secretary Ralph G. Recto likewise said this “reaffirms our stable economic and political environment and that we are on track to achieve a growth-enhancing fiscal consolidation.”

“We have a comprehensive ‘Road to A’ initiative to ensure that we secure more upgrades soon,” he added.

S&P Global said the Philippines’ sovereign rating reflects the economy’s “above-average growth potential.”

“This strength underpins constructive development outcomes. The ratings also benefit from the country’s strong external position,” it added.

For the first nine months of the year, the Philippine economy expanded by 5.8%, slightly below the government’s goal of 6-7% gross domestic product (GDP) growth this year.

The government is targeting 6.5-7.5% GDP growth next year and 6.5-8% growth from 2026 to 2028.

S&P Global expects Philippine GDP growth to average 5.5% this year, driven by exports and easing inflationary pressures.

“Ongoing reform on the business, investment, and tax fronts should benefit growth over the next three to four years.”

The Philippine economy will likely grow at an average of 6.2% a year over the next three years, it added.

“Solid household and corporate balance sheets, and sizable remittance inflows underpin the Philippine economy’s positive medium-term trajectory,” S&P Global said.

“Ongoing efforts to address infrastructure gaps, and improvements in the business climate through regulatory and tax reforms should also support growth in economic productivity.”

Fiscal reforms

The government’s fiscal reforms have also boosted the economic outlook, the credit rater said.

“We believe that effective policy making in the Philippines has delivered structural improvements to the country’s credit metrics. Fiscal reforms have raised government revenue as a share of GDP and helped to fund public investment. Improved infrastructure and policy environment have helped to keep economic growth strong in much of the past decade,” it said.

“The government’s fiscal and debt settings had deteriorated due to the economic fallout from the pandemic and the associated extraordinary policy responses. Fiscal buffers built through a long record of prudence before the pandemic thinned, but consolidation has begun with the economic recovery well on track. The Philippines’ low GDP per capita relative to other investment-grade sovereigns temper these strengths,” it added.

Latest data from the Treasury showed that the budget deficit narrowed by 1.35% to P970.2 billion in the first nine months.

The government is seeking to bring the deficit-to-GDP ratio to 5.6% this year and further down to 3.7% by 2028.

“The Philippine government has generally enacted effective and prudent fiscal policies over the past decade. Improvements to the quality of expenditure, manageable fiscal deficits, and relatively low general government indebtedness testify to this,” S&P Global said.

However, the credit rater said restoring fiscal and debt settings to pre-pandemic levels will be challenging and likely be a gradual process.

“The ongoing economic recovery in the Philippines should facilitate a reduction in the general government deficit and a further stabilization of the debt burden,” it said. “It will, however, take several years for fiscal balances to recover to pre-pandemic levels given the eroded fiscal headroom.”

S&P Global added that it expects the country’s net general government debt to gradually decline amid continued fiscal consolidation.

Moving forward, the debt watcher said it could upgrade the Philippines’ credit rating if the current account deficit and fiscal position remain well-managed.

“We may raise the ratings if our expectations of current account deficits tapering over the forecast period are realized such that buffers in the Philippines’ narrow net external asset position are maintained and if the government achieves more rapid fiscal consolidation,” it said.

S&P Global expects the country’s current account deficit to persist but at “modest levels.”

The BSP estimates the current account deficit to reach $6.8 billion this year, equivalent to 1.5% of GDP. In the first half of the year, the country’s current account deficit stood at $7.1 billion, accounting for 3.2% of economic output.

On the other hand, the rating outlook could be revised down to “stable” if economic recovery slows down or if the government’s fiscal and debt positions deteriorate.

“If persistently large current account deficits lead to a structural weakening of the Philippines’ external balance sheet, we would also revise the outlook to stable,” S&P Global added. – Luisa Maria Jacinta C. Jocson, Reporter

The country is still on track to meet the government’s gross domestic product (GDP) growth targets for this year and the next, the Department of Finance and Department of Budget and Management said.

“For growth, I think achievable, of course. This year, it may be nearer the lower end. For next year, it’s still achievable, 6.5%,” Finance Undersecretary and Chief Economist Domini S. Velasquez told reporters on the sidelines of the BusinessWorld Forecast 2025 forum on Tuesday.

The government is targeting 6-7% GDP growth this year and 6.5-7.5% expansion for 2025.

Separately, Budget Secretary Amenah F. Pangandaman said that the economic team is still confident that they can meet their growth goals.

“As of now, we’re still confident that we will be able to hit our targets, so we will see,” she told reporters on the sidelines of an event in Makati City.

The government is working to expedite the release of the budget and encourage agencies to spend for programs and projects, which would contribute to growth, she said.

In the first nine months, Philippine GDP growth averaged 5.8%. To meet the lower end of this year’s 6-7% target, the economy would need to grow by at least 6.5% in the fourth quarter.

The Development Budget Coordination Committee (DBCC) is set to have its next review in December.

The DBCC last met in June and kept its growth targets for this year up to 2028 but recalibrated its fiscal program.

Ms. Pangandaman said the DBCC will “most likely” revise its macroeconomic assumptions next month but noted that these changes would be “very minimal.”

“Actually, I’m not sure if they can take into consideration the new administration of President (Donald J.) Trump. I think it’s also nice to look at it. That’s what the technical working group is looking at.”

They are also studying the DBCC’s peso assumptions and may consider the incoming Trump administration’s proposed policies and its expected impact on the currency, she said.

“We’re studying that. The recommendation is the previous numbers we saw before. The new administration of President Trump, among others,” Ms. Pangandaman said.

On Tuesday, the peso slipped by a centavo to close at its record low of P59 per dollar, which it last hit on Nov. 21.

The peso sank to the P58 level in late October amid the greenback’s strength in the run-up to the US presidential election.

Mr. Trump’s win in the Nov. 5 vote caused the local unit to hit multi-month lows and eventually return to its all-time trough of P59 last seen in October 2022 as the dollar continued to soar on safe-haven demand as global markets await the new administration’s policy direction.

The DBCC expects the peso to range from P56-58 per dollar this year.

For her part, Ms. Velasquez said reforms such as the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act will help drive investments and fuel growth.

Earlier this month, President Ferdinand R. Marcos, Jr. signed into law the CREATE MORE Act, which expands fiscal incentives and lowers corporate income tax on certain foreign enterprises.

Ms. Pangandaman said the economic team will likely conduct international roadshows to promote CREATE MORE to investors.

“We’re just finishing the implementing rules and regulations. By next year probably, we have a chance to go out and promote CREATE MORE.”

These roadshows will likely take place in the United States, Japan, Korea and the Middle East, she said.

“Maybe the US because there’s a new administration and then new policies in terms of their investment decisions,” Ms. Pangandaman added. — Luisa Maria Jacinta C. Jocson