The Philippines' economic growth has plummeted to a five-year low, with the Gross Domestic Product (GDP) expanding by only 2.8% in the first quarter of 2026. This marks a significant drop from 5.4% in the same period last year, according to the Philippine Statistics Authority (PSA).
The decline reflects broader challenges, including the ongoing conflict in the Middle East and a major bribery scandal linked to flood control projects.
Economic Planning Secretary Arsenio Balisacan confirmed the revised growth targets will be lower due to heightened global uncertainty.
Our growth performance trails Vietnam, Indonesia and China, among others, in the region.
Arsenio Balisacan
Balisacan attributed the weak growth to several factors: the Middle East conflict, a scandal involving fraudulent flood control projects, and delays in the approval of the national budget.
These issues have stunted infrastructure development and sparked public unrest, as billions of pesos in taxpayer money were misappropriated.
Consumer prices surged to a three-year high of 7.2%, further exacerbating the economic situation.
Addressing corruption firmly and transparently is essential to rebuilding confidence among businesses, investors and consumers alike.
Arsenio Balisacan
National Statistician Dennis Mapa noted that this quarter's growth is the lowest since early 2021, excluding pandemic years.
To address these issues, economic managers will convene next week to reassess their targets.
In December, the government revised its GDP growth target for 2026 to between 5% and 6%. However, this is likely to be adjusted downwards.
Data indicates capital formation contracted by 3.3%, a stark contrast to the previous year's growth of 18.7%. Similarly, government spending fell from 5.3% to 3.0%.
Balisacan emphasized that global factors, including rising oil prices from the Middle East conflict, pose additional risks for the Philippines.
Household spending also decreased to 3%, down from 5.3% last year.
Major sectors such as industry and agriculture saw significant contractions, with industrial growth dropping to 0.1% and agriculture declining to 0.2%.
Balisacan warned that the effects of global oil prices and supply chain disruptions will continue to challenge the economy in the coming months.
Restoring public trust and institutional credibility remains a top priority for the Marcos administration, he added.
The economic managers are expected to adapt their program to reflect the changing global landscape, acknowledging that previous growth assumptions are no longer viable.