MANILA — The Philippine economy grew at a slower pace in the third quarter of 2025, raising concerns over investor and consumer confidence amid the ongoing flood control corruption scandal, according to the Philippine Statistics Authority (PSA).
The country’s gross domestic product (GDP) — the total value of goods and services produced — grew 4% from July to September, down from 5.5% in the previous quarter, PSA Chief Claire Dennis Mapa said Friday. This marks the slowest growth since Q2 2022.
The year-to-date average now sits at 5%, below the government’s target of 5.5% to 6.5% for 2025.
Sectoral Slowdown
All major sectors saw slower growth:
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Agriculture, forestry, and fishing grew 2.8%, a rebound from last year’s 2.7% decline but slower than the 7% growth in Q2.
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Industry posted its slowest growth since Q1 2021 at 0.7%, dragged down by a 0.5% contraction in construction. The sector contributes 26.7% of GDP.
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Services slowed to 5.5% from 7%, accounting for 66.7% of GDP.
DEPDev Secretary Arsenio Balisacan explained that weaker growth was partly due to stricter validation measures on public construction projects and delayed government disbursements. Household consumption also slowed to 4.1%, affected by typhoons and ongoing debates over infrastructure spending.
“Consumer confidence may have been shaken, prompting many households to postpone purchases,” Balisacan said.
Government spending also dipped, falling 5.8% from 8.7% in Q2, reflecting cautious fiscal management amid ongoing investigations.
Recovery in Sight
Despite the slowdown, officials are optimistic.
“We expect the economy to recover in Q4, allowing us to reach the 5% growth range,” Balisacan said.
The government is fast-tracking aid for families affected by recent typhoons and earthquakes, restoring infrastructure in heavily hit areas like Cebu and Davao, and ensuring faster release of conditional cash transfers and contingency funds.
On the external front, electronics exports are expected to remain strong thanks to stable demand and exemption from US tariff hikes. The government is also pursuing free trade agreements with the UAE, Chile, EU, and Canada and implementing the Regional Comprehensive Economic Partnership.
Strengthening Governance and Reforms
Balisacan emphasized the need for reforms to restore investor confidence and ensure proper use of public funds.
“We are pushing for legislative and operational reforms, strengthening transparency, improving budget execution, and enhancing coordination across agencies,” he said.
The Common Legislative Agenda for the 20th Congress includes 44 priority measures, such as anti-corruption laws, amendments to financial transparency acts, and a national infrastructure masterplan.
“Fighting corruption requires a whole-of-society effort. Government must act, but the private sector and vigilant citizens are key partners,” Balisacan said.
Despite challenges, the Philippines maintains strong macroeconomic fundamentals, including low inflation, stable currency, manageable debt, and a resilient workforce. With reform-driven policies and targeted interventions, officials are confident the country can rebuild investor trust, restore consumer confidence, and accelerate inclusive economic growth.
