Philippines GDP Growth Slows to 2.3% in Q2, Weakest Since 2021
Philippine Q2 GDP grew 2.3%, the slowest since 2021, as construction fell and investment shrank. First-half growth is 2.6%.
The Philippine economy expanded at its slowest annual pace in five years during the April-to-June period, as a sharp contraction in construction and subdued household spending weighed on activity.
Gross domestic product (GDP) grew 2.3% in the second quarter from a year earlier, according to the statistics agency. That was below the 2.8% median forecast in a poll of economists and a slowdown from the 2.8% growth recorded in the first quarter.
For the first half of the year, growth stood at 2.6% — well below the government's full-year target range of 3.5% to 4.5%.
Economic Planning Secretary Arsenio Balisacan acknowledged the weak result but pointed to signs of a possible turnaround. "Recent indicators give us reason for cautious optimism that the economy may already be entering the early stages of recovery," he said at a media briefing.
Balisacan attributed the slowdown largely to a corruption scandal involving flood-control projects that emerged last year. He said the controversy curtailed public spending and dampened investor confidence, especially in infrastructure.
Construction output contracted 14.8% year-on-year in the second quarter, a deeper decline than the 4.3% drop in the previous three months. Overall investment shrank 9.2%, marking a fourth consecutive quarter of contraction.
Household spending, which accounts for more than two-thirds of economic activity, grew at a softer 2.8% pace in the second quarter, down from 3.0% in the first, as elevated inflation eroded purchasing power. Inflation averaged 5.0% in the first seven months of the year, well above the central bank's 3.0% target.
The weaker-than-expected data will be a key consideration at the central bank's next policy review on August 27. The bank has raised its policy rate by 25 basis points at each of its last two meetings to curb price pressures.
The government trimmed its 2026 growth forecast to 3.5%-4.5% in June, citing the Middle East crisis and the fallout from the corruption scandal. For the medium term, the budget planning committee has set a GDP growth target of 5% to 6% for 2027 to 2030.