The Philippines government lowered its growth outlook for the next five years, trimming the target it had set for GDP expansion. Officials said the revision reflects mounting headwinds, notably the fallout from Middle East tensions and an intense El Niño weather pattern that threatens agriculture and energy supply. The downgrade signals a shift from the upbeat forecasts that guided recent investment inflows.

Beyond the 2028 end of President Ferdinand Marcos Jr.’s term, policymakers project a softer currency, with the peso expected to lose value against the dollar. A weaker peso could raise import costs for manufacturers and lift inflationary pressure, eroding consumer purchasing power. Investors are likely to reassess exposure to Philippine bonds and equities as currency risk climbs.

The outlook adjustment may temper the weak peso’s impact on the Philippines’ appeal as a regional growth engine, prompting firms to hedge currency exposure or shift supply chains elsewhere. Analysts note that fiscal planning will need to accommodate lower revenue projections, while the government may consider policy tools to stabilize the peso. Market participants should watch upcoming budget talks for clues on how officials intend to manage the slowdown.