Philippine economic growth slows further to 2.1% in Q3 2026

MANILA, Philippines – The Philippine economy slowed even further in the third quarter of 2026, posting its weakest growth since 2009, excluding the pandemic years.

Gross domestic product (GDP), the common measure of the economy based on the value of goods and services produced locally, expanded by 2.1% year-on-year in Q3 2026, the Philippine Statistics Authority said on Monday, November 9.

That is even lower than the revised 2.4% growth recorded in Q2 2026, and also below the revised 4% posted in Q3 2025.

This also marks the fifth consecutive quarter of slowing growth, from 5.5% in Q2 2025 to 4% in Q3 2025, 3% in Q4 2025, 2.8% in Q1 2026, and 2.4% in Q2 2026.

Growth for the first nine months of 2026 stood at 2.5%. That means the latest GDP figure leaves even less room for the government as it faces a difficult climb toward its already slashed full-year growth target of 3.5% to 4.5%.

Balisacan acknowledged that the economy would have to grow by about 6.3% in the fourth quarter just to reach the lower end of the target, which he described as “very, very challenging.”

GDP growth for the quarter also turned out to be worse than most economists expected. For instance, ahead of the release, Bank of the Philippine Islands lead economist Emilio Neri Jr. warned that private construction continued to weaken, while consumers were still hesitant to spend for discretionary goods as inflation squeezed their wallets. Still, Neri had expected a modest uptick to 3.2%, supported by stronger electronics support and government spending.

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In its midyear Philippines Economic Update, the World Bank projected economic growth of 3.7% for 2026, with fixed investment expected to contract by 0.5% and private consumption growth slowing to 3.5%. The bank maintained its overall GDP forecast in October.

Meanwhile, the ASEAN+3 Macroeconomic Research Office cut its growth forecast for 2026 to only 3.3%.

What’s dragging down growth?

Department of Economy, Planning, and Development Secretary Arsenio Balisacan attributed the continued slowdown to a multitude of factors, including high food and energy prices, disruptions to agriculture caused by bad weather, and weak investment.

Household spending, which has traditionally driven the Philippine economy, slowed further to 2.4% in Q3 from 2.9% in Q2. Spending on transportation also shrank by 5.3%, while food and non-alcoholic beverage consuption, which accounts for nearly a third of household spending, grew by just 1.6%.

With inflation reaching 7.8% in October, Balisacan warned that he doesn’t “expect the consumer spending to rebound strongly soon” because there are still “lag effects of that inflation,” adding that inflation for November will likely “continue to be challenged.”

Agriculture, which accounts for around 7% of the Philippine economy, contracted by 4.8%, with palay and corn output plunging by 17.8% and 17.4%, respectively. Fishing and aquaculture also declined by 8.5%.

The construction industry, meanwhile, contracted by 4%. On the investment side, construction spending fell by 3.5%, dragged down by a 15.1% decline in government construction, while spending by corporations and households barely grew.

“Agencies, especially those on the ground, are a bit cautious about acting on projects, especially those that are already ongoing,” Balisacan said, acknowledging that officials were concerned about becoming involved in “infrastructure scandals.” (READ: Flood control corruption cleanup spooks investors, drags PH growth – World Bank)

Investment remained another problem as gross capital formation contracted for the fifth consecutive quarter, though it was comparatively less of a decline at 0.2%. Foreign direct investment inflows have also fallen throughout the year, as net FDI inflows are now at just $4.07 billion across the first seven months of 2026, down 23.9% from the same period last year.

“FDIs are crucial to that because there’s only so much that we can get from domestic investments. The economy can expand,” Balisacan said, explaining that foreign investors also bring technology and expertise into the country. “Our push for getting FDIs in the country is crucial in modernizing our industries and expanding our productive capacities for future growth.” – Rappler.com

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