The Philippine economy remains on a growth path despite its slower expansion, with economic officials dismissing concerns that the country is slipping into stagflation.

Department of Economy, Planning and Development Secretary Arsenio M. Balisacan said on the 2026 Economic Journalists Association of the Philippines’ (EJAP) Economic Forum, ecomic growth remains above the 1.7-percent population growth rate, while labor market conditions continue to show declining unemployment.

Balisacan said the economy could perform better in the second half of 2026, particularly as government spending recovers after contracting by nearly 30 percent in consecutive quarters.

The Bangko Sentral ng Pilipinas also does not consider stagflation a useful description of the current economic situation, Governor Eli M. Remolona Jr. said.

“Stagflation usually means negative growth. We’re still growing. But what’s also true is we’re below potential.”

Remolona said potential economic growth could be around 5 to 6 percent, leaving an output gap that remains relevant to monetary policy. He said weaker growth could make the central bank less aggressive in raising rates, while inflation expectations would also factor into its decisions.

Remolona said growth of about 3.2 percent remains weak compared with potential growth of around 5.5 to 5.8 percent. He declined to signal the BSP’s next move, saying the decision would be made at its 27 August meeting.

Meanwhile, Department of Budget and Management Secretary Kim Robert C. De Leon said the government is working to improve spending execution as it prepares the 2027 national budget.

“As we work on the passage of the 2027 budget, we also continue to ensure that the 2026 budget is being implemented properly,” De Leon said.

He said the DBM is coordinating with implementing agencies to accelerate project implementation, while pursuing reforms aimed at improving budget rules, transparency and monitoring.

Among these is the proposed Philippine Budget Code, which seeks to institutionalize and codify budget rules. The DBM is also improving project monitoring through COMPASS and Project DIME, which uses satellite imagery to validate physical accomplishment reports.

The department is also reviewing unprogrammed appropriations, with De Leon saying the goal is to keep them as low as possible while ensuring that priority projects with contingencies can still be funded.

For the proposed 2027 budget, unprogrammed appropriations include foreign-assisted projects, the conversion of advances to the National Housing Authority from advances to subsidy, a risk management program linked to public-private partnership and privatization commitments, and a standby provision for the partial restoration of the initial remittance of the Philippine Deposit Insurance Corp.

De Leon said the government is also prioritizing infrastructure spending, particularly the completion and maintenance of flood control projects.

The DBM required the Department of Public Works and Highways to submit full documentation for proposed infrastructure projects, including their locations, geotagging and programs of work, to prevent anomalous, duplicate or nonexistent projects.

Balisacan said projects reviewed by the Investment Coordination Committee undergo feasibility studies and technical scrutiny. For smaller projects outside the ICC threshold, the government has established a monitoring system, with project status and issues to be reported quarterly to the President and Cabinet.