PH economic growth slows down to 2.8% in Q1 2026

The Philippine economy grew at a slower pace in the first quarter of 2026, weighed by the dent on consumer and investor sentiment caused by the flood control corruption scandal as well as the inflationary impact of the global fuel price shocks resulting from the Middle East war, the Philippine Statistics Authority (PSA) reported on Thursday.

At a press conference in Quezon City, PSA chief and National Statistician Claire Dennis Mapa reported that the economy, as measured by gross domestic product (GDP)—the value of goods and services produced in a period—grew 2.8% in the January to March 2026 period, slower than the 3% growth seen in the last quarter of 2025.

It was also lower than the 5.4% growth seen in the first quarter of 2025.

This is the economy’s slowest footing since the 3.8% contraction during the COVID-19 pandemic lockdown in the first quarter of 2021.

“We recognize that this outcome reflects the combined impact of significant domestic and global challenges. First, the lingering effects of the flood control corruption controversy weighed on consumer sentiment and business and investment confidence,” Department of Economy, Planning and Development Secretary Arsenio Balisacan said in his remarks during the press conference.

Household spending slowed down to 3% during the quarter from 5.3% year-on-year.

Meanwhile, investments contracted by 3.3% —a reversal from a growth of 4.5% in the first quarter of 2025– due to the contraction in construction sector of 4.5%.

Also weighing on the first quarter GDP growth was the delays in the passage and subsequent release of the 2026 national budget which “slowed the rollout of critical government programs and infrastructure projects, particularly in public construction.”

Government spending grew slower at 4.8% from 18.7% in the same period last year.

“Third and foremost, the conflict in the Middle East, which escalated toward the end of February, triggered higher global oil prices and renewed supply chain pressures, creating additional risks for oil-importing economies such as the Philippines,” Balisacan said.

Nevertheless, the country’s chief economist said the Philippine economy’s first quarter performance trails Vietnam, Indonesia, and China, among others in the region that have released their first-quarter GDP figures.

The main contributors to the January to March 2026 GDP were wholesale and retail trade; repair of motor vehicles and motorcycles (4.6%); financial and insurance activities (3.4%); and public administration and defense; compulsory social security (8.6%).

Among the major economic sectors, services posted a year-on-year growth of 4.5%, which was slower than the 6.2% growth recorded previously.

Agriculture, forestry, and fishing; and industry sectors saw contractions of 0.2% (from 2.2% growth) and 0.1% (from 4.6%).

Restoring public trust

Moving forward, Balisacan said restoring public trust and strengthening institutional credibility remain among the Marcos administration’s highest priorities.

“Addressing corruption firmly and transparently is essential to rebuilding confidence among businesses, investors, and consumers alike. At the same time, we are pursuing reforms that will improve transparency, accountability, and efficiency in government processes,” the DEPDev chief said.

“These include the digitalization of budget procedures, faster approval systems, and stronger project monitoring mechanisms.

Moreover, Balisacan said that agencies, as directed by the President, were ordered to accelerate the execution of high-impact infrastructure projects in the coming months.

“Their catch-up plans must be guided by clear milestones, sound risk management, and strong accountability mechanisms,” the socioeconomic planning chief said.

“On the external front, the Marcos Administration acted swiftly in response to the Middle East conflict through a whole-of-government approach under the Unified Package for Livelihoods, Industry, Food, and Transport, or UPLIFT. This program brings together coordinated and targeted measures to cushion the impact of rising fuel prices and global disruptions on vulnerable sectors and affected industries,” Balisacan said. —AOL, GMA News