Philippines slashes 2026 growth outlook on Iran war, graft mess

MANILA: The Philippines cut its economic growth target for this year, as the country wrestled with the impact of costlier oil spurred by the Iran war and a government corruption crackdown.

“We hope to achieve at least in 2026, 3.5% to 4.5% with all these changes,” economic planning secretary Arsenio Balisacan said in an interview with local broadcaster One News on Monday.

The Southeast Asian nation was earlier looking at gross domestic product expanding by 5% to 6% this year before the Middle East conflict began in late February. The war pushed Philippine inflation to one of the hottest in Asia and curbed household spending.

Government spending slowed amid a graft scandal involving billions of pesos in flood infrastructure projects. The Philippine economy grew just 2.8% last quarter — the slowest pace outside the pandemic since 2009 — after expanding by 4.4% in all of 2025.

Balisacan’s comments came after a meeting by the Development Budget Coordination Committee, the panel that reviews macroeconomic targets.

State spending is expected to rebound in the second half of 2026, Balisacan said. “The second quarter is still a little problematic in the sense that we still see some lag effects of the previous quarter and the last half of last year’s effects coming in,” he said.

The recent shocks, particularly the Middle East crisis, have not eroded the Philippines’ growth narrative, the economic planning chief said.

“I am hopeful that we are able to navigate well this Middle East conflict, and of course our domestic issues too, because we have still those lingering, we should be able to get back to that high-growth scenario,” he said.