Philippine economy slows to 2.1% in Q3

MANILA, Philippines (Updated 11:30 a.m.) — Philippine economic growth weakened to 2.1% in the third quarter of 2026, slower than the 2.4% growth in the second quarter.

The latest data from the Philippine Statistics Authority on Monday, November 9 extends the country's weak expansion, as agriculture contracted and industry remained nearly flat.

The last quarter's rate is also lower than last year's 4% for the same period.

Services remained the main driver of growth, expanding by 3.7% from a year earlier and contributing 2.5 percentage points to overall GDP growth.

Wholesale and retail trade and the repair of motor vehicles and motorcycles made the largest industry contribution at 0.8 percentage point.

Agriculture, forestry and fishing contracted by 4.8%, while industry posted a marginal decline of 0.003%.

Gross national income, meanwhile, grew by 2.7%.

GDP measures the value of goods and services produced within the country's borders. GNI measures income earned by the country's residents, including net income from abroad.

Drag on investments

A clear weak spot behind the growth slowdown was investment, squeezed by higher borrowing costs and a sixth consecutive quarterly decline in public construction.

The Bangko Sentral ng Pilipinas raised its key policy rate by 25 basis points to 5% in August. A subsequent 50-basis-point increase in October, after the third quarter ended, lifted the rate to 5.5%.

Economic Planning Secretary Arsenio Balisacan said tighter financing conditions weighed on investment during the quarter.

Still, Balisacan said higher rates could eventually support consumption and investment "if the BSP succeeds in anchoring inflation expectations back to target."

Headline inflation accelerated to 7.8% in October, driven by higher energy and transport costs and raising expectations of another rate increase at the central bank's final policy meeting on December 17.

Public construction, meanwhile, contracted for a sixth consecutive quarter as investigations into alleged nonexistent, incomplete or substandard flood-control projects slowed infrastructure spending.

The investigations began in late 2025. Public construction had already been the largest contributor to the second quarter's 9.2% decline in investment, according to data released in August.