Philippine economy growth slows to 2.1% in third quarter
- This figure represents the fifth consecutive quarter of slowing economic growth.
- Agriculture contracted by 4.8% due to tropical cyclones and monsoon rains.
- Services remained the primary driver of growth, expanding by 3.7%.
- The country needs 6.3% growth in the fourth quarter to meet its annual target.
This figure represents the weakest annual expansion since the 2009 recession, excluding the years of the COVID-19 pandemic.
During a press briefing on 9 November, PSA chief Undersecretary Claire Dennis Mapa announced the results. She stated, “Ang Gross Domestic Product o GDP ng Pilipinas ay nagtala ng pagtaas na nasa 2.1% sa ikatlong quarter ng taong 2026”.
This growth rate marks a decline from the 4% expansion recorded in the same period of 2025.
Fifth consecutive quarter of slowing economic expansion
The third quarter of 2026 marks the fifth consecutive quarter of slowing economic growth for the Philippines. The 2.1% growth rate is lower than the revised 2.4% recorded in the second quarter of 2026.
The Philippine Statistics Authority initially reported second-quarter growth at 2.3% before revising the figure upward to 2.4%. Compared with the previous three months, the economy expanded by 0.1% during the third quarter.
This latest annual growth figure also falls below the 4% rate recorded in the third quarter of 2025.
Agriculture contraction and services sector performance
The services sector remained the primary driver of growth in the third quarter of 2026, expanding by 3.7%. This sector contributed 2.5 percentage points to the overall GDP growth during the period.
Conversely, the agriculture, forestry and fishing sector contracted by 4.8% in the third quarter. The industry sector recorded no growth, showing a marginal decline of 0.003%. The services sector growth also slowed to 3.7%. The contraction in agriculture was caused by the enhanced southwest monsoon and tropical cyclones.
Factors driving the economic slowdown
High inflation, rising food and fuel costs, interest rate increases, and a corruption scandal also weighed on demand, confidence, and investment. In October, inflation reached 7.8%, which constrained household purchasing power.
Fuel costs rose due to the conflict in the Middle East, which impacted transportation, electricity, and production. The agriculture, forestry, and fishing contraction of 4.8% was attributed to the impact of tropical cyclones and the enhanced southwest monsoon. The output of palay and corn fell by more than 17%, which reduced rural incomes and added pressure to food supplies.
Secretary Balisacan said tighter financing conditions impacted investment.
Public construction and investment decline
Public construction has contracted for six consecutive quarters. The rate of contraction eased to 15.1% in the third quarter, compared with a 33.4% decline in the previous quarter.
These declines are linked to investigations into flood-control projects that began in late 2025. These issues hindered the ability of contractors to purchase materials and pay workers.
Household consumption and monetary policy
Household final consumption expenditure increased by 2.4% in the third quarter of 2026.
Headline inflation reached 7.8% in October.
The central bank has its final policy meeting scheduled for 17 December.
Annual growth targets and economic outlook
Economic growth for the first nine months of 2026 stood at 2.5%. The 2.1% growth recorded in the third quarter was below the 3.0% forecast by Reuters.
The country requires 6.3% growth in the fourth quarter to meet the annual growth target of 3.5% to 4.5%.
Electronics exports provide growth boost
Overall exports grew by 8.6% during the third quarter. Electronics exports increased by 19.4% due to demand for artificial intelligence-related products.
Gross national income increased by 2.7%.
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