The Philippine economy expanded by only 2.3% in the second quarter of 2026, according to the Philippine Statistics Authority (PSA). This marks the slowest growth rate since the pandemic, driven by the repercussions of the ongoing conflict in the Middle East.
Declining Growth Indicators Raise Alarm
The latest figures indicate a significant decline from the 2.8% growth in the previous quarter and a stark drop from the 5.4% growth recorded a year earlier.
Philippine Statistics Authority
The first half of 2026 has seen economic growth fall short of expectations, with the government adjusting forecasts downward. The current growth trajectory puts the Marcos administration at risk of not meeting its targets.
Analysts had anticipated a slight uptick, with a median estimate of 2.7% growth from 14 economists surveyed. However, the economy continues to feel the strain from inflation driven by global conflicts.
Household consumption, a crucial component of economic activity, grew by only 2.8% this quarter, down from 5.2% last year. Meanwhile, government spending has also declined, with infrastructure investment shrinking by 9.2%.
Inflation peaked at 7.2% in April, significantly impacting consumer spending power. Although inflation eased slightly in subsequent months, it remains well above the government's target of 3%.