Postpandemic low: Q2 GDP grew by just 2.3%
The Philippine economy continued its anemic pace of growth in the second quarter as the Middle East war reached its peak impact while government spending remained sluggish.
Gross domestic product (GDP) grew by just 2.3 percent in the second quarter, slowing further from the 2.8-percent growth in the previous quarter and the 5.4-percent expansion posted a year earlier.
The latest data from the Philippine Statistics Authority marked the country’s weakest quarterly economic growth in 16 years outside the pandemic, when the economy had expanded by 1.8 percent in the fourth quarter of 2009.
Averaging just 2.6 percent in the first half, GDP growth fell further behind the Marcos administration’s already downgraded full-year target of 3.5 to 4.5 percent. The figure also fell short of the 2.7-percent median growth estimate of 14 economists polled by the Inquirer.
So far, the Philippines is the slowest-growing economy in Southeast Asia, trailing Vietnam’s 8.4 percent, Malaysia’s 5.8 percent and Indonesia’s 5.3 percent.
“What we are experiencing right now, I believe, is transitory. It’s temporary. We are making efforts to get back to the high-growth trajectory,” Economic Planning Secretary Arsenio Balisacan said.
“The developments in the Middle East came at a time when we were still recovering from domestic challenges, particularly the infrastructure scandal from last year. I would like to think these are short-term phenomena,” he added.
This extended the country’s prolonged slowdown that had begun in the third quarter of 2025.
Further, combined with the national government’s outstanding debt of P19.07 trillion as of end-June, the weak print pushed the debt-to-GDP ratio to a 22-year high of 66 percent.
Household consumption grew by just 2.8 percent during the quarter, slowing sharply from 5.2 percent a year earlier. Outside the pandemic, this was the weakest pace since the third quarter of 2010, when household spending expanded by 2.6 percent.
War-driven inflation, which peaked at a three-year high of 7.2 percent in April, eroded consumers’ purchasing power and weighed on domestic demand. Weaker employment and slower remittance growth also dragged down consumer spending.
Government spending also lost momentum, growing by 8.3 percent from 8.7 percent a year earlier.
Gross capital formation contracted by 9.2 percent, reversing the 0.9-percent growth last year. Government construction plunged 32.4 percent, indicating that infrastructure activity has yet to recover from the graft scandal.
On the production side, agriculture grew by 2.7 percent, slowing from 7 percent a year ago. Industry contracted by 2.4 percent, a reversal from a 2.1-percent growth, while services expanded by 4.5 percent, easing from 6.9 percent.
One bright spot was external trade. Exports grew by 12.2 percent, accelerating from 4.9 percent a year ago, while imports increased by 5.5 percent from 3.6 percent.
Looking ahead, Balisacan said the economy would need to grow by at least 4.4 percent in the second half to meet the lower end of the full-year target. He said growth would be supported by a rebound in public spending.
******
Get real-time news updates: inqnews.net/inqviber
