Philippine economy likely slows to 2.7% growth in third quarter

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Philippine Q3 economy slows

Highlights

Economists polled by BusinessWorld Online forecast Philippine third-quarter 2026 GDP growth at 2.7%, below the 3.9% pace from Q3 2025.
Nine-month 2026 average GDP growth of 2.6% remains significantly lower than the government's full-year target range of 3.5% to 4.5%.
Inflation averaged 6.5% in Q3 2026, with September hitting 7.2%, weighing on household consumption and undermining private-sector investment and public construction.

Economists lower third-quarter growth view

As reported by BusinessWorld Online, a poll of 16 economists and analysts yields a median estimate of 2.7% gross domestic product growth for the July-to-September period.

If realized, that pace is slower than the 3.9% expansion recorded in the third quarter of 2025, but slightly higher than the 2.3% growth posted in the second quarter of 2026. That would bring average GDP growth in the first nine months to 2.6%, below the government's full-year target range of 3.5% to 4.5%.

The Philippine Statistics Authority is set to release third-quarter GDP data on Monday, Nov. 9. Maybank economist Azril Rosli says growth should be supported by public spending, seasonal activity and a gradual recovery in consumption, although elevated inflation and borrowing costs are likely to restrain household spending while weak investment remains a major drag.

Inflation and weak spending weigh on outlook

Inflation accelerates to 7.2% in September from 6.1% in August, bringing the nine-month average to 5.4% and the third-quarter average to 6.5% amid persistently high fuel and food prices.

Security Bank Research Head and Chief Economist Angelo B. Taningco says a downside surprise for GDP could come from only modest household consumption growth under continued inflationary pressure. He adds that capital formation remains weak because of limited public construction activity, softer private business sentiment and possible moderation in government spending due to bad weather.

Philippine sovereign bond market reforms and planned index inclusion were previously examined in our publication as steps that could improve liquidity and broaden the investor base. We noted, however, that cheaper borrowing and stronger market participation do not automatically translate into higher productive investment or faster growth, unless accompanied by credible fiscal policy, effective public spending, and broader structural reforms that deepen domestic capital markets and improve the business environment.

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