The Philippine economy expanded by 2.8% in the first quarter of 2026, marking a significant deceleration compared to previous periods, the Philippine Statistics Authority (PSA) reported on Thursday.
This latest figure is down from the 3% growth recorded in the final quarter of 2025 and is substantially lower than the 5.4% growth rate seen during the same quarter last year.
PSA Undersecretary and National Statistician Claire Dennis Mapa noted that while the Services sector grew by 4.5%, other key areas struggled; Agriculture, forestry, and fishing contracted by 0.2%, while Industry dipped by 0.1%.
The Department of Economy Planning and Development attributed the sluggish performance to a combination of factors:
- Lingering fallout from the flood control controversy.
- Delays in the national budget passage and infrastructure fund releases.
- The Middle East conflict, which has caused a surge in global oil prices.
Economic Planning Secretary Arsenio Balisacan stated the government intends to counter these setbacks by curbing corruption and accelerating high-impact infrastructure. He also highlighted the Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) to mitigate the oil shock.
Furthermore, the administration is bracing for the environmental impact of El Niño.
“In anticipation of this risk, we support the reactivation of the El Niño Task Force to ensure a coordinated national response aimed at minimizing economic losses and protecting livelihoods,” Balisacan said.
“Our focus will be on sound water and irrigation management, ensuring the reliability of critical infrastructure, and strengthening climate risk mapping and weather forecasting to support timely and science-based interventions,” he continued.
The economy has faced a string of challenges since 2025, including severe typhoons, international tariff disruptions, and reduced government spending.
While managers initially hoped for a 5% rebound this year, the late-February escalation in the Middle East and rising inflation have forced a reality check.
Balisacan confirmed that the government’s annual growth targets are now subject to downward revision.
“Definitely. We’ll move our growth targets lower, because given the situations, especially the global uncertainty remaining highly elevated, our Middle East conflict assumptions no longer hold,” he said.
Despite the slowdown and rising prices, Balisacan dismissed concerns of “stagflation,” citing stable unemployment and previous successes in price stabilization.
“Stagflation, [in a] standard textbook is usually thought of as the presence of three things. One is high inflation, where prices keep rising, the other one is slow or stagnant economic growth. And third is high unemployment,” he explained.