Philippine Economic Growth Slows and Misses Government Targets Again
The Philippine economy grew more slowly at the end of 2025 because of several problems at home that made people and businesses less confident. The official numbers showed that the economy only grew by 4.4% over the whole year. For the 3rd year in a row, this result was below the government’s stated target range.
Economic managers said the result was disappointing but showed that shocks were affecting production, consumption, and investment all at the same time. Climate-related problems and problems with governance both slowed down the economy. These things made it hard for recovery to happen, even though the government tried all year.
Source: SunStar/Website
Fourth Quarter Performance Dragged Down Full Year Expansion
During the months of October to December, economic growth slowed down a lot compared to the previous quarters. During the 4th quarter, the gross domestic product grew by only 3.0%. This was a slowdown from the 3.9% growth that had been reported before.
The weaker quarter had a big effect on the overall annual performance. Analysts said that weakness in the 4th quarter often means that there are bigger problems with the structure. Less activity late in the year showed weaknesses in domestic demand.
Climate Disruptions and Scandals Undermine Business Confidence
Officials said that weather-related problems were a big reason why the economy was slowing down. Across the country, class suspensions and work stoppages messed up production schedules and daily life. These events caused a drop in production in a number of important areas.
The flood control corruption scandal hurt businesses’ and consumers’ trust even more. The uncertainty surrounding public infrastructure projects made it harder for private investors to make decisions. Combined shocks made people in the economy more careful.
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Domestic Demand Weakens as Consumption and Investment Slow
During the last 3 months of 2025, growth in domestic demand slowed down a lot. It only grew by 0.7% because both spending and investment fell. This brought down the full year’s growth in domestic demand to 3.7%.
During this time, both public and private construction were hit the hardest. The growth of private consumption also slowed down as uncertainty grew. Overall, these trends slowed down the economy.
Government Defends Reforms Despite Short Term Growth Costs
Economic officials admitted that reforms hurt short-term growth. It was said that investigations into corruption were needed to bring back accountability. Officials said that better governance will help the economy grow more in the future.
Officials stressed that the goal of the reforms is to make projects better and make public spending more efficient. Even though there are short-term costs to the economy, strengthening institutions is still a top priority. Policymakers saw reforms as investments in long-term stability.
Climate Adaptation and Sector Performance Shape 2025 Results
The government promised to take stronger steps to adapt to climate change in order to limit future problems. These include better disaster readiness and better early warning systems. Project NOAH and weather monitoring agencies got their funding back.
Financial services, manufacturing, and wholesale and retail trade all helped the economy grow. The growth rates for agriculture services and industry were also good. But overall contributions were not enough to reach growth goals.
Government Positions 2026 as Economic Rally Point
Officials said that 2026 would be a time when the economy would start to pick up again. Infrastructure projects will start up again, but with stricter rules against corruption. The goal of planning reforms is to speed up public investments that have a big effect.
Reforms to the way the government buys things and measures to make finances more open are some of the most important things on the legislative agenda. The government also wants to take advantage of the chances that come with being the chair of ASEAN. Leaders said they were sure that growth would become more resilient and inclusive in the future.
