Philippine economy seen posting modest Q4 rebound on holiday spending, remittances

Traders Union
All News
Economic Data
Philippine economy Q4 rebound

Highlights

Economic forecasts for Philippine Q4 GDP range from 3.2% to 5%, driven by holiday spending, remittances, tourism, and potential government infrastructure outlays.
Philippine inflation rose to 7.8% in October from 7.2% in September, pushing the 10-month average to 5.6%, well above the central bank’s 2% to 4% target.
The Bangko Sentral ng Pilipinas' 50-basis-point rate hike to 5.5% is expected to moderate household spending and investment, potentially dampening growth through 2028.

Fourth-quarter growth outlook and key drivers

As reported by BusinessWorld Online, economists expect the Philippine economy to post a modest rebound in the October-to-December period, helped by holiday spending, remittance inflows, tourism receipts and a possible increase in government infrastructure outlays.

Security Bank Research Head and Chief Economist Angelo B. Taningco says full-year growth is likely to reach 3.0%, with a fourth-quarter recovery supported by holiday spending and higher inflows from remittances and tourist arrivals amid a relatively cheap local currency. Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort projects 5% GDP growth in the fourth quarter, citing favorable base effects, catch-up government spending and stronger holiday-season activity, while Maybank Economist Azril Rosli expects 3.2% growth in the quarter and 2.7% for the full year.

De La Salle University Economist Marites M. Tiongco says faster government infrastructure implementation and a recovery in private investment could support growth, alongside resilient exports and services. She adds, however, that seasonal consumption alone is unlikely to offset continued weakness in capital formation.

Inflation, rates and target risks cloud outlook

Even with expectations of a late-year pickup, economists warn that another weak third-quarter reading would make it harder for the Philippines to meet the government's 3.5% to 4.5% growth target for 2026.

Revised Philippine Statistics Authority data show the economy grew by 2.4% in the second quarter, down from 5.4% a year earlier and 2.8% in the previous quarter, bringing first-half average growth to 2.6%. A BusinessWorld poll of 16 economists and analysts yields a median estimate of 2.7% GDP growth for the July-to-September period, with the PSA scheduled to release third-quarter data on Monday, Nov. 9.

Inflation accelerates to 7.8% in October from 7.2% in September, pushing the 10-month average to 5.6%, above the central bank's 2% to 4% target range. S&P Global Market Intelligence Principal Economist Harumi Taguchi says full-year GDP growth is likely to settle at 3.2%, while citing downside risks including the ongoing U.S.-Iran war, El Niño, an AI-market correction and persistently weak construction activity.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion says the economy would need to grow by about 7% in the fourth quarter to reach the lower end of the official target, assuming third-quarter growth of 2.2%, and around 11% to reach the upper end. Economists also say higher borrowing costs after the Bangko Sentral ng Pilipinas' 50-basis-point rate hike on Oct. 22, which brought the target reverse repurchase rate to 5.5%, are likely to restrain household spending and business investment.

University of Asia and the Pacific Economist Marco Antonio C. Agonia says the latest BSP move may dampen growth prospects through 2028 because monetary policy works with a long lag, with fuller effects expected in 2027 through bank lending, credit costs and corporate financing. Tiongco similarly says the rate hike is likely to have a modest dampening effect in the remaining months of 2026, while arguing that fiscal policy should help ease supply bottlenecks and improve infrastructure implementation.

Our earlier article on planned Philippine sovereign bond reforms explained how the new pricing convention for peso-denominated government bonds and expected inclusion in J.P. Morgan’s Government Bond Index-EM could broaden the investor base and improve liquidity. It also stressed that cheaper funding and stronger market activity do not automatically translate into higher productive investment unless supported by fiscal credibility, better project execution, and broader capital-market and structural reforms that improve access to long-term financing for businesses.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.