Philippine economy slows to 2.8% in Q1, weakest in 5 years

MANILA, Philippines, May 9 ------ The Philippine economy grew by only 2.8% in the first quarter of 2026, putting the country well below the pace needed to meet full-year forecasts by multilateral and private-sector analysts.

The first-quarter gross domestic product growth was slower than the 3% recorded in the fourth quarter of 2025 and 4% in the same period last year, based on Philippine Statistics Authority data released. The quarterly GDP is the lowest recorded since the first quarter of 2021, a year after the global COVID-19 pandemic broke out and shut down markets.

The figure also fell short of the growth implied by earlier forecasts. The Asian Development Bank projected Philippine GDP growth of 4.4% for 2026, while private firms' analysis expected the economy to expand by about 5.2% this year. BMI, a Fitch Solutions unit, said in February that it expected Philippine growth to accelerate to 5.2% in 2026. But this was before the global oil shock following the United States' attacks and subsequent actions on Iran.

The government's data agency said the main contributors to first-quarter growth were wholesale and retail trade and repair of motor vehicles and motorcycles, which grew 4.6%; financial and insurance activities, 3.4%; and public administration and defense and compulsory social security, 8.6%. Among major sectors, services grew 4.5% year-on-year.

Agriculture, forestry and fishing declined by 0.2%, while industry contracted by 0.1%. On the demand side, household final consumption expenditure grew 3%, while government final consumption expenditure rose 4.8%. Exports of goods and services increased 7.8%, while imports of goods and services grew 6.1%. Gross capital formation, however, fell 3.3%, pointing to weaker investment activity during the quarter.

Source: philstar.com