PH economic growth slows down to 4% in Q3 2025

The Philippine economy as measured by gross domestic product (GDP) grew slower in the third quarter of 2025 as investor and consumer confidence were dampened amid the ongoing flood control projects corruption scandal, according to the Philippine Statistics Authority (PSA).

The country’s GDP —the value of goods and services produced in a period— grew by 4% in the July to September 2025 period, slower than the 5.5% growth rate seen in the April to June 2025 period, PSA chief and National Statistician Claire Dennis Mapa reported at a press conference on Friday.

The third quarter GDP growth was the slowest since the second quarter of 2022, when the economy grew by 4.3%. 

The July to September economic performance brought the year-to-date average to 5%, below the Marcos administration’s target range of 5.5% to 6.5% growth for 2025.

In his statement during the press conference, Department of Economy, Planning and Development (DEPDev) Secretary Arsenio Balisacan said that “the third quarter’s performance reminds us of the urgent need to address key challenges and strengthen our foundations for rapid, sustained, and inclusive growth.”

“It is important to understand the factors behind the slowdown,” Balisacan said.

All of the country’s major economic sectors —agriculture, industry, and forestry— saw a quarter-on-quarter slowdown.

In particular, the agriculture, forestry and fishing sector posted a growth rate of 2.8% during the period, a rebound from the 2.7% decline in the same period last year albeit slower than the 7% growth rate in the second quarter of the year.

The agriculture sector contributed 7.4% to the total third quarter GDP.

The industry sector recorded its slowest growth since the first quarter of 2021 at 0.7% from 2.1% quarter-on-quarter and 5% year-on-year, on the back of a 0.5% contraction construction from a growth of 9% last year.

The industry sector accounted for 26.7% of the economy during the period.

Meanwhile, the services sector also slowed down to 5.5% from 7% quarter-on-quarter, contributing 66.7% to the total GDP.

“On the supply side, services and industry posted weaker growth, with a sharp contraction in public construction due to stricter validation measures for DPWH’s (Department of Public Works and Highways) civil works, as well as the implementation of stricter requirements that delayed billings and disbursements for government projects. Private construction remained respectable, but investment in durable equipment was subdued,” Balisacan said.

On the demand side, household consumption growth slowed to 4.1% from 5.32% in the second quarter.

“Widespread cancellations of school, work, and travel activities due to typhoons likely dampened spending,” the country’s chief economist said. 

“Moreover, consumer confidence may have been affected by the ongoing probes and discussions on government infrastructure spending, prompting many households to postpone purchases, especially durable goods. Compared to the second quarter, we also observed a lower disbursement of conditional cash transfers during the third quarter, which contributed to weaker consumption,” the DEPDev chief added.

Government consumption, likewise, saw a quarter-on-quarter decline of 5.8% from 8.7% in the prior period.

Balisacan noted that trends on the supply and demand sides of the economy reflected consumer and business expectations and provided a clear signal for the government to act boldly and decisively.

Recovery

Nonetheless, the country’s chief economist expressed confidence that the economic slowdown seen in the third quarter will be reversed.

“We expect the economy to recover… we are working to recover some of the lost grounds in the third quarter,” Balisacan said.

“We expect the fourth quarter will be better than the third quarter and this will enable us to hit the fives,” the DEPDev chief added, noting that the economic growth will still settle within 5% rate.

The socioeconomic planning chief said that “the government is implementing strategic interventions aimed at bolstering investor confidence and consumer trust and thereby accelerating economic growth.”

Balisacan said the government is fast-tracking social protection and financial aid for families and communities affected by the recent calamities while agencies and local government units are restoring infrastructure and services in key areas like Cebu and Davao, which were severely impacted by Typhoon Tino and the recent earthquake. 

With the official declaration of a national state of calamity, the country’s chief economist said the government now has the authority to:

• Access emergency funds more quickly to support urgent needs
• Control prices of basic goods to prevent hoarding and inflation
• Fast-track relief, rehabilitation, and recovery operations across affected regions
• Mobilize national and local resources without bureaucratic delays

“These measures will help accelerate the restoration of economic activity and protect vulnerable communities. In the remainder of the year, we will prioritize the timely release of conditional cash transfers, disbursement of Calamity, Quick Response, and Contingency Funds, and the rapid rehabilitation of damaged infrastructure, such as bridges, dikes, and roads, to prime the economy for recovery,” Balisacan said.

On the external front, the DEPDev chief said the country’s electronics exports may continue to benefit from stable external demand as well as the exemption from the US tariff increases. 

“Given this, we are aggressively pursuing free trade agreements with the UAE, Chile, EU, and Canada and fully implementing the Regional Comprehensive Economic Partnership,” Balisacan said.

Moreover, the socioeconomic planning chief said that the government is committed to rebuilding investor confidence by ensuring that every peso of taxpayer money is spent wisely and efficiently, through harnessing digital tools like the Modernized PhilGEPS Open Data Portal and the Digital Imaging for Monitoring and Evaluation, or DIME, Project, and push for stronger project and program oversight.

“We encourage Filipinos to report delays or irregularities through platforms like Sumbong sa Pangulo, for example,” Balisacan said. 

Reforms

“We will pursue legislative measures and operational reforms to strategically address constraints to good governance and effective public financial management. This includes strengthening transparency, improving budget execution, and enhancing institutional coordination,” he said.

“We are working closely with our legislators to ensure enactment of priority legislation under the Common Legislative Agenda (CLA) for the 20th Congress, as endorsed by the Legislative-Executive Development Advisory Council (LEDAC),” he added. 

Balisacan said the CLA includes 44 priority measures aimed at driving social and economic transformation, such as:

• Amendments to the Bank Deposits Secrecy Law, to enhance transparency in financial transactions and support anti-corruption investigations
• Amendments to the Anti-Money Laundering Act, to strengthen enforcement and compliance
• The proposed Masterplan for Infrastructure and National Development, to align long-term investments with national priorities
• A measure to disqualify relatives of public officials (up to the 4th degree) from participating in government contracts, to prevent conflicts of interest and promote integrity

“Let me emphasize that the fight against corruption must be a whole-of-society effort. It takes two to tango—while government must rightfully go after the crooked and reform its systems and processes, the private sector must also play an active role in championing good governance. At the same time, a vigilant civil society is an invaluable partner in reporting irregularities and demanding accountability,” Balisacan said.

“Despite these challenges, we remain optimistic. The Philippines has strong macroeconomic fundamentals—low inflation, manageable fiscal deficit and public debt, stable currency and external balance, and a stable banking sector. On top of these, we have a young and resilient workforce and a reform-driven government. We are committed to rebuilding investor confidence and restoring public trust by upholding sound economic governance toward inclusive growth and raising further the potential of our economy by accelerating the momentum for transformative reforms,” the DEPDev chief said. — VAL/RSJ, GMA Integrated News