The government has adjusted its economic growth forecast range downwards to 5.5 percent to 6.5 percent for this year due to the Iran-Israel conflict and Trump’s tariffs, the multi-agency Development Budget Coordination Committee (DBCC) said on Thursday.

DBCC previously projected a 6-8 percent growth for 2025, based on its announcement in December last year.

However, the new minimum outlook is higher than the first quarter economic growth of 5.4 percent, based on data from the Philippine Statistics Authority (PSA).

“The revisions take into account heightened global uncertainties such as unforeseen escalation of tensions in the Middle East and the imposition of US tariffs,” Department of Budget and Management Secretary Amenah Pangandaman said.

For the next three years, DBCC expects economic growth to expand within 6 to 7 percent, which is little changed from its previous estimate of 6 to 8 percent.

DBCC sees weaker trade in goods, projecting that imported goods will increase by 3.5 percent this year, while exports are expected to contract by 2 percent due to the Trump administration’s 17 percent tariff on Philippine goods.

Factory output declined in May, placing it near the neutral level of 50.1 from a clear expansionary level of 53 in April based on the S&P Global Purchasing Managers’ Index.

External factors worsen

“The situation was further exacerbated by a deteriorating demand from foreign markets. As global trade tensions escalate, the outlook for overseas demand appears increasingly precarious,” S&P Global Market Intelligence economist Maryam Baluch said.

The government, however, expects prices of Dubai crude oil to remain stable at $60 to $70 per barrel this year and into 2028, despite the ongoing Middle East tensions.

Prices are expected to be tempered by easing global demand and expected increases in global oil inventories.

Overall inflation is expected to range from 2 to 3 percent, within the Bangko Sentral ng Pilipinas’ target of 2 to 4 percent.