Quezon city: The government will ramp up efforts to address the impact of the Middle East conflict and will continue to push for reforms to boost economic growth, the Department of Economy, Planning, and Development (DEPDev) said. Philippine economic growth slowed to 2.8 percent in the first quarter of the year from 3 percent in the fourth quarter of 2025.
According to Philippines News Agency, National Statistician Dennis Mapa highlighted that the services sector experienced growth at 4.5 percent. In contrast, agriculture, forestry, and fishing declined by 0.2 percent, while the industry contracted slightly by 0.1 percent. During a briefing at the Philippine Statistics Authority's office in Quezon City, DEPDev Secretary Arsenio Balisacan noted that the recent growth data mirrors the combined impact of significant domestic and global challenges.
Balisacan identified issues such as the lingering effects of the flood control corruption controversy, which adversely affected consumer sentiment and business confidence. Household final consumption expenditure slowed to 3 percent from the previous year's 5.3 percent, and gross capital formation dropped by 3.3 percent. He also pointed out that delays in the passage and release of the 2026 national budget have hampered the rollout of critical government programs and infrastructure projects.
The Secretary emphasized the impact of the Middle East conflict, which escalated towards the end of February, leading to higher global oil prices and renewed supply chain pressures. He mentioned, "These challenges are real, and the Marcos administration is confronting them directly and decisively." The administration is focusing on addressing corruption to restore consumer and business confidence and is pursuing reforms to enhance transparency, accountability, and efficiency in government services.
Due to the slowdown in government expenditure in the first quarter, Balisacan stated that the President has directed implementing agencies to expedite high-impact infrastructure projects in the coming months. He acknowledged the agencies' cautious approach to avoiding corruption but noted recent improvements in project execution speed compared to earlier periods.
The government plans to enforce stricter validation standards and enhanced monitoring systems to ensure efficient, responsible, and transparent use of public resources. Balisacan also mentioned the government's Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT), which coordinates targeted measures to address the oil price shock's impact.
Additionally, the government is preparing for potential effects of the developing El Ni±o phenomenon. DEPDev supports reactivating the El Ni±o Task Force to ensure a coordinated national response, focusing on sound water and irrigation management, reliable infrastructure, and improved climate risk mapping and forecasting.
Balisacan expressed optimism regarding the growth of exports, especially semiconductor and electronics exports, which are expected to remain resilient due to sustained global demand and ongoing tariff exemptions. Despite uncertainties, the government remains guided by sound economic fundamentals, clear policy direction, and a commitment to structural reforms to improve Filipinos' lives.
As the government works to mitigate the Middle East conflict's impact, Balisacan indicated that the economic team might revise growth targets. He said, "The combination of events, both domestic and global, is likely to reduce the growth, not just in the Philippines but many other countries." The Development Budget Coordination Committee plans to meet next week to assess the country's growth and fiscal targets, previously set at 5 to 6 percent for the year. Given recent developments and elevated global uncertainty, Balisacan noted that pre-conflict assumptions are no longer valid, necessitating a revision of growth targets.
