Review of the Medium-Term Macroeconomic Assumptions
and Fiscal Program for Fiscal Year (FY) 2026 to 2030
July 8, 2026
INTRODUCTION
The Development Budget Coordination Committee (DBCC), in its 193rd meeting, has approved the updated medium-term macroeconomic assumptions, growth targets, and the fiscal program for Fiscal Years 2026 to 2030 to ensure that the government’s economic strategy remains responsive to evolving global and domestic developments.
The updated assumptions reflect prudent planning amid heightened external uncertainties while preserving the country’s strong macroeconomic fundamentals. Rather than reacting to short-term volatility, the revised program positions the Philippine economy to sustain growth, protect fiscal stability, and create the conditions for a stronger and more resilient recovery over the medium term.
The Philippines continues to benefit from sound economic institutions, a stable financial system, manageable public finances, and sufficient fiscal policy space to respond to emerging risks. Guided by these strengths, the DBCC remains committed to maintaining macroeconomic stability, safeguarding investor confidence, and supporting sustained, inclusive, and high-quality economic growth.
REAL GROWTH PROJECTIONS
|
Year |
GDP Growth Targets
(in percent)
|
|
2026 |
3.5 to 4.5 |
|
2027 - 2030 |
5.0 to 6.0 |
The Philippines' economic growth is projected to slow down to 3.5 to 4.5 percent in 2026 before recovering to 5.0 to 6.0 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.
In detail, the elevated inflation this year may temper household consumption and investments, while potentially slower growth in remittances and visitor arrivals may also dampen overall growth. Moreover, 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. On the upside, growth in electronics exports and manufacturing may remain firm on the back of stable global demand.
MACROECONOMIC ASSUMPTIONS
The DBCC has likewise approved the following revisions to the macroeconomic assumptions in light of emerging data and recent economic developments.
|
Indicator |
2026 |
2027 |
2028 |
2029 |
2030 |
|
Inflation (%) |
6.0 - 7.0 |
4.0 - 5.0 |
2.0 - 4.0 |
2.0 - 4.0 |
2.0 - 4.0 |
|
Dubai Crude Oil (USD/bbl) |
80 - 100 |
70 - 90 |
60 - 80 |
60 - 80 |
60 - 80 |
|
Foreign Exchange Rate (Php/USD) |
60 - 62 |
60 - 62 |
60 - 62 |
60 - 62 |
60 - 62 |
|
Goods Exports growth, BPM6 (%) |
3.0 |
4.0 |
4.0 |
4.0 |
5.0 |
|
Goods Imports growth, BPM6 (%) |
5.0 |
5.0 |
4.0 |
4.0 |
5.0 |
Notes: bbl = barrel, BPM6 = Balance of Payments 6th edition, Php= Philippine peso, USD = US dollar
Inflation is projected to average 6.0 to 7.0 percent in 2026, reflecting elevated global fuel prices, persistent supply-side pressures, and the emerging second-round effects of the ongoing Middle East conflict.
Consistent with the latest forecasts and market expectations, inflation is anticipated to ease to 4.0 to 5.0 percent in 2027, then stabilize at 2.0 to 4.0 percent from 2028 to 2030.
Dubai crude oil prices are assumed to average USD 80 to 100 per barrel in 2026, in line with international oil futures market trends. Oil prices are expected to decline further to USD 70 to 90 per barrel in 2027, then settle at USD 60 to 80 per barrel from 2028 to 2030, supported by gradual improvement in global oil supply prospects, albeit with elevated uncertainty.
Meanwhile, the foreign exchange rate assumption has been revised to an average of Php 60.00 to Php 62.00 against the US dollar from 2026 to 2030, reflecting external developments and domestic headwinds.
To align with global market developments, the DBCC also refined the country’s trade assumptions. Goods export growth is projected to rise by 3.0 percent in 2026, reach 4.0 percent from 2027 to 2029, and accelerate to 5.0 percent in 2030.
Likewise, goods imports are expected to grow by 5.0 percent in 2026-2027 and to gradually normalize over the medium term at around 4.0 to 5.0 percent in 2028-2030.
MEDIUM-TERM FISCAL PROGRAM
We have also recalibrated our fiscal targets to ensure strategic, growth-supportive fiscal consolidation. These revised targets underscore our commitment to sustaining the government’s crisis response while supporting recovery and long-term economic resilience.
(in billion pesos)
|
PARTICULARS |
2026 |
2027 |
2028 |
2029 |
2030 |
|
Program |
Projections |
||||
|
Revenues |
4,807.0 |
5,205.5 |
5,524.4 |
5,993.5 |
6,519.9 |
|
% of GDP |
15.8% |
15.7% |
15.4% |
15.5% |
15.6% |
|
Disbursements |
6,465.9 |
6,900.5 |
7,246.5 |
7,614.1 |
7,978.3 |
|
% of GDP |
21.2% |
20.8% |
20.2% |
19.7% |
19.1% |
|
Deficit |
(1,658.9) |
(1,694.9) |
(1,722.1) |
(1,620.6) |
(1,458.4) |
|
% of GDP |
-5.4% |
-5.1% |
-4.8% |
-4.2% |
-3.5% |
Revenue collections are expected to increase from Php 4.81 trillion in 2026 to Php 5.21 trillion in 2027, and to Php 6.52 trillion by 2030. This will be supported by the full implementation of tax policy reforms, such as the VAT on Digital Services Act, CREATE More law, Capital Markets Efficiency Promotion Act, and the new Mining Fiscal Regime, along with continued improvements in tax administration, digitalization, and enforcement.
On the expenditure side, the national government’s disbursement performance reached Php 1.49 trillion in the first quarter of the year. This strong spending pace is expected to continue and accelerate in the last quarter, reaching Php 6.47 trillion (21.2 percent of GDP) by the end of 2026.
Over the medium term, disbursements are projected to average 20.2 percent of GDP annually from 2026 to 2030, reaching Php 6.90 trillion in 2027 and Php 7.98 trillion by 2030.
Based on the revenue and spending outlook, the DBCC is committed to lowering the fiscal deficit from 5.4 percent of GDP in 2026 to 3.5 percent of GDP by 2030, while sustaining the government’s investments in human capital development.
FY 2027 PROPOSED NATIONAL BUDGET
The proposed FY 2027 National Budget is set at Php 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.
To support this direction, the government will advance key governance reforms, including the accelerated implementation of the Government Optimization Program, the review and refinement of the performance incentive system, and the institutionalization of Maintenance and Other Operating Expenses (MOOE) efficiency measures. These efforts aim to eliminate unnecessary recurring expenditures and redirect resources toward programs that support vulnerable sectors.
To enhance local governance and expand the LGUs’ contribution to national development, the DBCC will support ongoing devolution reform through the preparation and approval of Devolution Transition Plans (DTPs). At the same time, the rationalization of cash subsidy and financial assistance programs will be prioritized to address overlaps, improve targeting of beneficiaries, and enhance public service delivery.
Strengthening infrastructure governance by enhancing project oversight and monitoring will be pursued, while expediting the implementation of key infrastructure flagship initiatives under Public-Private Partnership initiatives.
CLOSING
The updated macroeconomic assumptions and fiscal program demonstrate the government’s commitment to responsible economic management in an increasingly uncertain global environment. While external developments continue to pose risks to economies around the world, the Philippines remains well-positioned to respond through sound fiscal discipline, evidence-based policymaking, and sustained investments in the country’s long-term development priorities.
The DBCC will continue to closely monitor domestic and global developments and take timely, data-driven policy actions as necessary to preserve macroeconomic stability, protect the welfare of Filipinos, and sustain economic growth.
Anchored on the Philippine Development Plan 2023–2028 and the vision of President Ferdinand R. Marcos Jr., the government remains steadfast in pursuing reforms that strengthen public institutions, enhance transparency and accountability, restore public trust, and deliver tangible improvements in the lives of every Filipino.
