An interagency economic body approved on Wednesday lower growth and higher inflation targets for 2026 which ''reflect prudent planning amid heightened external uncertainties while preserving the country’s strong macroeconomic fundamentals''.

The Development Budget and Coordinating Committee (DBCC) set growth between 3.5 percent to 4.5 percent and inflation between six percent to seven percent.

In 2025, the economy grew at an average of 4.4 percent due to typhoons and decreased public spending due to the flood control scandal. In the first quarter, growth went down to 2.8 percent for the first quarter due to conflict in the Middle East that caused oil prices to rise and inflation to climb.

The DBCC said growth is expected to recover to five percent to six percent in 2027 to 2030.

''Growth is expected to moderate this year amid heightened domestic and external uncertainties, including the lingering effects of governance-related issues, geopolitical tensions in the Middle East, and other global developments affecting business and consumer confidence,'' said the DBCC.

The higher inflation forecast reflects'' elevated global fuel prices, persistent supply-side pressures, and the emerging second-round effects of the ongoing Middle East conflict'', the DBCC added.

A factor affecting inflation outlook is ''the looming El Niño phenomenon in the second half of the year may reduce the agriculture sector's output and disrupt economic activities, if not accompanied by appropriate disaster preparedness and resilience measures,'' added the DBCC

The proposed 2027 national budget is set at P 7.2 trillion, equivalent to 21.7 percent of GDP. This reflects an efficient, high-impact spending by streamlining redundant programs, and strengthening transparency in the use of public funds, the DBCC said. PHS