Balisacan signals GDP growth target cut amid Middle East crisis

The Marcos administration’s economic managers will have to cut its economic growth targets to reflect the anticipated slowdown brought by the global fuel crisis amid the United States-Israel versus Iran war in the Middle East, Department of Economy, Planning and Development (DEPDev) Secretary Arsenio Balisacan said on Thursday.

In a press conference, Balisacan said the Development Budget Coordination Committee (DBCC) will meet next week to assess the current situation.

“We definitely will move our growth targets lower given the situation… Global uncertainty,” the DEPDev Secretary said.

This came after the country’s gross domestic product (GDP) slowed down to 2.8% in the first quarter of 2026 from 3% in the last quarter of 2025 – its slowest footing since the first quarter of 2021 when it contracted by 3.8% during the COVID-19 pandemic lockdowns.

The economic managers, sitting as the DBCC, set a 5% to 6% GDP growth target for 2026, 5.5% to 6.5% for 2027, and 6% to 7% goal for 2028.

“We would think that the shock... The conflict associated with the Middle East was so profound. I think that’s a foregone conclusion,” Balisacan said.

“Because of the reality that we are facing, our program is dynamic in the sense that we have to adjust when situation changed. You can’t keep persisting and insisting on something that’s no longer attainable. The world has changed so much since last year. And so we had to reflect that in our [targets],” he added.

The socioeconomic planning chief said the DBCC will convene next week to discuss new growth assumptions moving forward, taking into consideration the Middle East crisis.

Earlier, Balisacan told the Senate that the GDP could suffer a reduction of 1.47 percentage points to 1.95 percentage points, with full-year economic growth clocking in at 3.5% to 4% this year under a “most severe scenario” in which crude hits $200 per barrel and inflation quickens to 11.4% to 14.3%.

The muted economic growth could also push unemployment and poverty incidence higher, the DEPDev said.

Under its so-called “Scenario 5,” the DEPDev is expecting unemployment rate to hit 5.67% to 5.84% and poverty incidence hitting 12.39% to 12.55%, against a baseline estimate of 4.4% for unemployment rate and 11.9% for poverty rate. — JMA, GMA News