Go: Philippine 2025 GDP ‘not a disaster’
Finance Secretary Frederick Go has maintained that the Philippines’ lackluster economic growth in the last quarter of 2025 is “not a disaster,” pointing to strong macroeconomic fundamentals that remain in place.
On Thursday, data showed the Philippine economy closed 2025 with a weak fourth-quarter performance of just 3 percent, a slump from the already disappointing revised 3.9-percent growth in the third quarter.
This pulled full-year gross domestic product (GDP) growth down to 4.4 percent—the slowest pace since 2011, excluding the peak pandemic years—and marked the third consecutive year the Marcos administration has fallen short of its growth target.
“It’s not a disaster. The global average of GDP growth … is only 2.9 percent. The Asean average is 3.8 percent. We’re growing at 4.4, so it’s not the end of the world,” Go said in a speech during a life insurers association event.
The weak growth had largely been expected, resulting from the flood control corruption scandal that froze government spending. However, even the country’s chief economist admitted he did not expect the slowdown to be this severe.
But for Go, the fundamentals that will allow the Philippine economy to grow at 5.5 percent this year “are intact.”
“None of the macroeconomic fundamentals have changed. So we should get back on track this year,” he said.
The Marcos administration is now targeting economic growth of 5 to 6 percent in 2026, 5.5 to 6.5 percent in 2027 and 6 to 7 percent in 2028. All of these goals had been revised downward.
2026 spending, outlook
”I’m hopeful that we will achieve that. We’re not going to get there in the first quarter. It has to happen progressively,” Go told reporters after the event.
On the spending side, Go said his department had already settled the primary spending figure for the first quarter. The official number is yet to be made public.
The top five spending agencies, according to Go, are the Department of Public Works and Highways, Department of Education, Department of Health, Department of Agriculture and Department of Transportation.
“We’ve met with the Department of Budget and Management and we’ve met with the top spenders among the agencies. The DOF (Department of Finance) has cleared the amount of money that we’re making available to the government for its expenditures. We agreed with them what their spending will be and how much money will be released,” he said.
Go is also banking on controlled inflation, as well as growth in remittances and exports, as key drivers of economic expansion this year.
Exports, the finance chief said, are the bright spot in the growth numbers.
Data from the DOF showed that export sales rose by 23 percent in December 2025 compared to the same period a year earlier, while the 2025 year-on-year growth reached 15 percent.
Alvin Arogo, first vice president and chief economist at the Philippine National Bank, agrees with Go that the Philippines is “not in a crisis”, although he also believes that a strong growth rebound is unlikely before 2027.
This is on expectations that the prolonged slowdown in public construction, triggered by heightened scrutiny of government projects, is unlikely to ease until the latter half of 2026.
“To be clear, the Philippines is not in a crisis,” Arogo said at a British Chamber of Commerce and Industry forum on Thursday, the same day state statisticians released the fourth-quarter GDP data.
Arogo said a GDP growth rate of around 4 percent, while slow by Philippine standards, should be viewed in context, noting that the expansion was “not a disaster” and one that many advanced economies would consider strong.“There’s no need to panic, but some things must change,” Arogo said, “[But] even without structural changes, the shift in sentiment alone will allow the Philippines to post a stronger growth in 2027.”
He acknowledged that the widening corruption probe has “started to impact the GDP.”
Public construction contracted 26 percent year-on-year in the third quarter of 2025. It fell further by nearly 42 percent in the fourth quarter, after infrastructure projects were delayed or halted amid corruption investigations and disruptions from successive typhoons.
Without meaningful reforms that could quickly restore public trust in government, Arogo said weak infrastructure spending was likely to persist until the third quarter of 2026, pushing back hopes for a strong GDP recovery.
Despite the subdued growth outlook, Arogo said macroeconomic indicators remain broadly stable.
Inflation eased to 1.8 percent in December, well within the Bangko Sentral ng Pilipinas’ target range of 2 to 4 percent.
Arogo said this strengthens the case for another rate cut, which could bring interest rates to around 4.25 percent. This cut, he added, would help keep financing conditions “accommodative” for businesses even as fiscal activity weakens.
Citing past episodes, Arogo said the growth drag from anti-corruption efforts tends to be temporary, as public sentiment eventually shifts back toward prioritizing economic expansion.
“What we have learned from experience is that in episodes of an anti-corruption drive, good or bad, it doesn’t last long,” he said. “After five quarters of seeing slow growth, public sentiment turned into prioritizing growth.”
Other private sector analysts also expect to Philippine economy to fall short of its 6 percent growth potential this year, with any meaningful rebound hinging on the government’s ability to restore confidence after a sweeping corruption scandal rattled businesses and consumers.
For Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, even a 5 percent expansion now seems out of reach this year.
Investment-led sectors continue to weaken with no clear bottom in sight, he said, while consumption — a traditional engine of growth — is unlikely to offer much support in the near term as households rein in spending to rebuild their savings.
Chanco’s assessment followed data showing that gross domestic product expanded just 3 percent in the fourth quarter of 2025 — the slowest pace in more than 14 years outside the pandemic — and well below the median estimate of 4.2 percent in a poll of 14 economists by the Inquirer.
The weak outturn dragged the 2025 growth to 4.4 percent, missing the government’s 5.5 percent to 6.5 percent target and falling short of the 4.8 percent consensus forecast.
Officials and analysts pointed to a mix of climate-related disruptions and the Marcos administration’s sweeping anti-corruption drive, which curbed government spending and weighed on business and consumer confidence.
“We cautioned, rightly, in our response to the third quarter data that fixed investment would get worse before it gets better, and would fall into the red outright from the fourth quarter,” Chanco said. “We now think that this weakness will almost certainly bleed into the first half of this year, at least.”
“We maintain that private consumption—the primary growth engine, making up roughly 75 percent of the economy—is unlikely to come to the rescue any time soon,” he added.
Nicholas Antonio Mapa, chief economist at Metropolitan Bank & Trust Co., struck a more guardedly optimistic note, saying the economy could rebound to a still below-potential pace of about 5.2 percent this year.
“GDP growth is expected to rebound in 2026 as government steps up efforts to jumpstart public construction,” Mapa said. “This, alongside the return of the Filipino consumer could help the Philippine economy get back to hitting its true growth potential.”
Jonathan Koh, an economist and foreign-exchange analyst at Standard Chartered Bank, said the Philippines would only reach its growth potential if the government can repair the crisis of confidence by strengthening accountability and transparency.
Growth this year, he said, may settle around 5 percent.
“I think the key thing really is there needs to be a recovery in sentiment. And it’s very hard to tell exactly when [that will happen],” Koh told a press conference. “The good thing is the administration is aware of it and they are taking steps to address it.”
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