DLSU cuts Philippines growth forecasts for 2026–2028

MANILA, Philippines — De La Salle University (DLSU) has made downward adjustments to its economic growth forecasts for this year until 2028 amid persistent global and domestic headwinds.

In its report on the Philippine economy released yesterday, DLSU said that it now projects the country’s gross domestic product (GDP) growth at 3.08 percent for this year, slightly lower than the 3.11 percent forecast it provided in May.

The forecast is also below the government’s five to six percent growth target for the year.

“While the difference is small, indicators suggest that the recent global and domestic shocks may be affecting the economy more persistently than previously thought,” DLSU said.

First quarter economic growth slowed to 2.8 percent in the first quarter, the weakest in five years, due to the lingering concerns on the flood control controversy and impact of the Middle East conflict.

DLSU said it expects growth to slow further to 2.5 percent in the second quarter and to 2.2 percent in the third quarter.

“By then, the impact of the energy shock could be fully transmitted, the BSP (Bangko Sentral ng Pilipinas) rate hike cycle could reach the potential height of its demand-dampening effect and the impending food crisis (due to fertilizer cost surge and upcoming El Niño) could begin contracting agricultural output,” DLSU said.

While fourth quarter growth shows potential recovery at 4.81 percent, DLSU said this hinges on the government’s ability to catch up on infrastructure spending and other priority projects.

“The US-Iran conflict has not subsided; instead, it has entered a volatile cycle of military escalation and diplomatic efforts. Factoring this global uncertainty and the continued domestic political crisis (as seen in the recent changes in the Senate leadership), we firmly believe that Philippine growth will lie materially below its potential growth for 2026,” DLSU said.

While DLSU expects growth to pick up next year and in 2028, the pace is slower than the forecasts it provided in May.

In particular, DLSU now expects the economy to grow by 3.40 percent in 2027, lower than the previous forecast of 3.93 percent.

DLSU also lowered its 2028 growth forecast to 3.60 percent from 5.71 percent, previously.

Both the 2027 and 2028 forecasts are below the government’s targets of 5.5 to 6.5 percent for next year and six to seven percent for 2028.

“We do not see faster growth under the current domestic and international conditions. Unless the US/Israel-Iran war ends soon (the two parties just agreed to end it) and the world economy recovers fast and the domestic mood turns around, this state of affairs will remain until the end of this administration,” DLSU said.

In terms of the inflation outlook, DLSU said it now expects average inflation to be at 4.9 percent this year.

Overall inflation eased to 6.8 percent in May from 7.2 percent in April, driven by slower food and fuel price increases.

“Our updated forecasts now suggest a gradual decline in prices over the remainder of the year,” DLSU said.