Philippine gross domestic product expanded 3% year-on-year during the final quarter of 2025, missing economists’ forecasts and slowing from earlier in the year. The weaker performance was attributed to disruptions from infrastructure corruption, adverse weather, and external trade challenges, raising concerns among investors about the country’s growth trajectory.
Fourth-quarter GDP growth in the Philippines lagged behind the consensus estimate of 3.8%, marking the lowest yearly rise since the first quarter of 2021, when the economy contracted. The full-year 2025 expansion reached only 4.4%, coming in below the government’s 5.5% to 6.5% target range and signaling a significant loss of momentum.
In addition, government expenditures grew at a reduced pace of 3.7% compared to 5.8% in the prior quarter, while household consumption growth also moderated to 3.8% from 4.1% QoQ. Fixed investment registered a 7.2% decline, reversing more than a year of gains, as gross capital formation fell 10.9%, a steeper drop than the previous quarter’s 2.8% decrease.
Economic Planning Secretary Arsenio Balisacan acknowledged that the slowdown was more pronounced than expected, but underscored the administration’s intention to restore growth through renewed reforms and efforts to strengthen public trust. For the coming year, Philippine officials are projecting GDP to advance between 5.0% and 6.0%, with expectations of further acceleration in 2027.
Eli Remolona, Governor of the Bangko Sentral ng Pilipinas, previously noted the possibility that weaker-than-anticipated fourth-quarter data could affect the outcome of the central bank’s February 19 policy review. The central bank has already brought its key interest rate down by a total of 200 basis points in this easing cycle, reaching a three-year trough of 4.5%, with Remolona indicating that the phase of rate reductions is nearing its endpoint.
