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The Philippine economy grew 2.8% in the first quarter of 2026, lower than the 5.4% growth in the same quarter last year and reflecting the combined impact of significant domestic and global factors
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The first quarter gross domestic product was also lower than the 3% growth in the fourth quarter of 2025 and was the weakest quarterly growth since the contractions in 2020 until the first quarter of 2021 as a result of the COVID-19 pandemic
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Challenges include the lingering effects of the flood control corruption controversy, delays in the passage and subsequent release of the 2026 national budget, and the Middle East conflict
The Philippine economy grew 2.8% in the first quarter of 2026, lower than the 5.4% growth in the same quarter last year, reflecting the combined impact of domestic and global factors.
The first quarter gross domestic product (GDP) was also lower than the 3% growth in the fourth quarter of 2025 and was the weakest quarterly growth since the contractions in 2020 until the first quarter of 2021 as a result of the COVID-19 pandemic.
Department of Economy, Planning, and Development secretary Arsenio Balisacan in a statement said the outcome was due to domestic and global challenges, including the lingering effects of the flood control corruption controversy that weighed on consumer sentiment and business and investment confidence.
The delays in the passage and subsequent release of the 2026 national budget slowed the rollout of critical government programs and infrastructure projects, particularly in public construction.
Moreover, the ongoing conflict in the Middle East, which started on February 28 when the United States and Israel attacked Iran, triggered higher global oil prices and renewed supply chain pressures, creating additional risks for oil-importing economies such as the Philippines, Balisacan said.
According to the Philippine Statistics Authority, the main contributors to the first quarter 2026 GDP growth were wholesale and retail trade; repair of motor vehicles and motorcycles, 4.6%; financial and insurance activities, 3.4%; and public administration and defense; compulsory social security, 8.6%.
Among the major economic sectors, the services posted a year-on-year growth of 4.5%, while agriculture, forestry, and fishing dropped by 0.2% and industry declined by 0.1%.
On the demand side, household final consumption expenditure grew year-on-year by 3%. Similarly, government final consumption expenditure, exports of goods and services, and imports of goods and services posted growths of 4.8%, 7.8%, and 6.1%, respectively.
The Development Budget Coordination Committee (DBCC) in its 192nd meeting last December adjusted the GDP forecast to 5-6% for 2026 and 5.5-6.5% for 2027. This is lower than the 6% to 7% growth target announced by the DBCC in June last year.
Looking ahead, Balisacan said while global uncertainty remains elevated, the government “remain firmly focused on strengthening the country’s economic foundations and regaining stronger growth momentum in the succeeding quarters” and further ensure budget support for various measures through the proposed Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) Bill.
Government spending and project implementation is expected to accelerate in the coming months as agencies operationalize their catch-up programs
The semiconductor and electronics exports are expected to remain resilient, supported by sustained global demand and continuing tariff exemptions.
READ: PH economy weaker in Q4, misses full year growth target
