PH economic growth to rebound in 2026 – DOF

The Department of Finance (DOF) described the slower-than-expected 4.0 percent growth in the Philippine economy in the third quarter of 2025 as a temporary setback, citing public underspending linked to anti-corruption efforts.

“Although there has been a slowdown in government spending as we continue to address the flood-control corruption controversy, this reflects the administration’s strong resolve for good governance and to spend only on legitimate, high-impact programs and projects,” said Finance Secretary Ralph G. Recto.

“This short-term adjustment will pave the way for more efficient, transparent, and accountable public spending moving forward,” he added.

He said President Ferdinand R. Marcos, Jr.’s campaign to clean up government is expected to strengthen institutions and governance and drive faster growth in the medium term.

Cases have already been filed against those allegedly involved in the flood control fund scandal, with more accountability measures to follow in the coming months.

“As said before, the flood control controversy has also revealed that not all capital expenditures translate into growth. And now that we’re plugging those leaks and reallocating funds to high-impact investments—such as education, healthcare, agriculture, and digitalization—we will only grow faster,” Recto said.

The DOF said catch-up measures have been put in place to align government spending with national priorities and keep growth inclusive.

The administration has programmed PHP 1.307 trillion in disbursements for the fourth quarter of 2025, with most of the amount going to social services as directed by President Marcos.

Secretary Recto also cited the Bangko Sentral ng Pilipinas (BSP) for its timely decision to cut policy rates last month to stimulate economic activity.

“We already anticipated a temporary slowdown, which is why the BSP cut policy rates last month to help stimulate economic activity,” he said.

He emphasized that the Philippine economy remains on solid footing, with easing inflation, strong fundamentals, and sound fiscal and monetary policies that will enable a strong rebound in 2026.

Growth in the third quarter was led by the services sector, which expanded 5.5 percent and accounted for 66.7 percent of total economic output.

The government expects this momentum to continue in services such as wholesale and retail trade, business process outsourcing, real estate, and tourism.

Agriculture also returned to positive territory, growing by 2.8 percent compared to a 2.6 percent contraction in Q3 2024, thanks to improved palay, poultry, and egg production.

Household consumption remained a stable growth driver at 4.1 percent.

Net exports posted a strong recovery, rising by 8.7 percent in Q3 2025 from contractions of 0.5 percent in the previous quarter and 34.0 percent in Q3 2024.

Looking ahead, the government’s strategy for 2026 centers on institutional reform, transparent budgeting, and growth-oriented investments.

The proposed PHP 6.793 trillion national budget for 2026 is under deliberation and is expected to deliver major gains in employment, infrastructure, and public services.

Recto said the budget will be implemented with strict fiscal discipline to ensure that taxpayer money only funds “genuine initiatives” with measurable impact.

Infrastructure will remain a major growth pillar, with reforms at the Department of Public Works and Highways (DPWH) aimed at curbing duplication, improving coordination, and ensuring equitable allocation of funds.

The DPWH will collaborate with Project NOAH and other scientific agencies to design flood-control and disaster-resilience projects based on data and evidence.

The Department of Transportation (DOTr) and the Department of Tourism (DOT) have begun expanding Siargao Airport’s capacity from 200 to at least 750 passengers daily ahead of the 2026 ASEAN Summit.

The DOTr and San Miguel Corporation also broke ground in July 2025 on the Caticlan–Boracay Airport, which will serve up to seven million passengers annually by 2027.

These infrastructure initiatives are expected to boost connectivity, tourism, and regional economic development.

The DOF said recent economic reforms—including the CREATE MORE Act, the Enhanced Fiscal Regime for Large-Scale Metallic Mining, the Capital Markets Efficiency Promotion Act (CMEPA), and the Investors’ Lease Act—will sustain investor confidence.

In November 2025, Samsung Electro-Mechanics Philippines committed PHP 50.7 billion in new investments, the first project to benefit from CREATE MORE incentives.

Talks are also ongoing with Hanwha Ocean to support the Philippine Navy’s submarine program and with DL Group for small modular reactor (SMR) energy investments.

The Philippine Economic Zone Authority (PEZA) reported PHP 175.37 billion in new and expansion projects approved as of October 2025, inching closer to its PHP 250 billion annual target.

Meanwhile, the Board of Investments (BOI) is evaluating 30 new manufacturing proposals valued at PHP 33.54 billion, which are expected to generate 1,668 jobs.

To boost long-term competitiveness, the Philippines formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in August 2025.

The CPTPP, a trade bloc of 12 Asia-Pacific economies, offers expanded market access, deeper integration into global supply chains, and more opportunities for high-value investments.