The Philippines economy could grow by up to four percent in next year, officials said Wednesday, adding that the budget deficit is expected to fall within its target.

Socio-Economic Planning Secretary Augusto Santos told reporters: ''We expect the economy to grow by 2.6-3.6 percent next year.

''The global crisis is not over but the worst is over,'' he added.

Growth slowed to 4.6 percent last year and to 0.4 percent in the first three months of the year, forcing the government to cut its 2009 outlook to between 0.8-1.8 percent.

However, GDP in the three months to June was a better-than-expected 1.5 percent on the back of improving exports and massive stimulus spending.

Santos also said the budget deficit this year was likely to come in below the adjusted target ceiling of P250 billion or 3.2 percent of GDP ''because of the developments in the economy''.

The review would cover GDP, budget deficit, inflation, and exchange rate targets, he added.

President Gloria Macapagal Arroyo instructed her economic team to review next year's economic growth goal of 2.6-3.6 percent to see if this can be raised to 4 percent, said Santos.

''It's possible that the deficit this year can be less than 3.2 percent...because of this better than expected actual economic performance,'' Santos told reporters.

''The president found the 2.6 to 3.6 percent GDP (target) for next year as a little bit on the low side. She said she feels it could grow faster than 3.6 (percent),'' Santos said.

''We feel it is realistic. The DBCC will have to meet and see if we can stretch the upper end of 3.6 percent to 4 percent.''

The Development Budget Coordination Committee (DBCC), an inter-agency group tasked to set the government's targets, meets regularly to review and assess Manila's economic assumptions.

Santos said second half growth may be supported by strong remittance inflows while spending related to the presidential elections in May 2010 may lift growth next year. (Reuters)