Philippine GDP Growth Slows to 2.8 Percent in Q1 2026

The Philippine Statistics Authority said on May 7 that the country's gross domestic product grew by 2.8 percent in the first quarter of 2026. This compares to 5.4 percent growth in the same period a year earlier. It is the weakest quarterly performance since the COVID-19 pandemic.

The figure fell short of the government's target range of 5 percent to 6 percent. That target had already been lowered from an original range of 6 percent to 7 percent because of an economic slowdown linked to a flood control corruption scandal. The reading also came in below analysts' expectations of 3.4 percent.

According to the Philippine Statistics Authority, services grew by 4.5 percent in the quarter. Agriculture, forestry and fishing declined by 0.2 percent while industry contracted by 0.1 percent.

Officials said household consumption slowed as the Middle East conflict pushed fuel and food prices higher. This caused inflation to accelerate at its fastest pace since the 1990s. Inflation reached 7.2 percent in April 2026. The Bangko Sentral ng Pilipinas resumed interest rate hikes in April after its inflation outlook deteriorated due to the Middle East crisis.

The central bank now projects inflation will average 6.3 percent for the full year of 2026. Central banks typically raise interest rates to curb excessive borrowing and spending when inflation rises. The government is implementing the Unified Package for Livelihoods, Industry, Food, and Transport to cushion the impact of higher prices.

Officials stated they are working with local government units, producers, transport groups and other stakeholders to protect vulnerable households, workers and overseas Filipino workers from global volatility.