Philippines Private consumption

Economic growth ebbs in the first quarter of 2026

GDP growth slows for third consecutive quarter: The Philippines' GDP expanded 2.8% on a year-on-year basis in Q1, following 3.0% growth in the previous quarter—the third consecutive quarter of deceleration. Barring the pandemic-induced downturn in 2020–2021, Q1's reading was the worst since 2009. The figure was also the weakest reported so far for Q1 in ASEAN and undershot market expectations of an acceleration. On a seasonally adjusted quarter-on-quarter basis, the economy increased 0.9% in Q1, following 0.6% growth in the previous quarter.

External headwinds compound domestic challenges: Compared with the previous period's data, readings in Q1 softened for private consumption (+3.0% yoy vs +3.8% in Q4) and exports of goods and services (+7.8% vs +13.3% in Q4). In contrast, readings picked up for government consumption (+4.8% vs +0.7% in Q4), fixed investment (-2.7% vs -6.4% in Q4) and imports of goods and services (+6.1% vs +3.2% in Q4). Growth in private spending decelerated to a five-year low amid weak consumer confidence and the highest inflation in a year and a half during the quarter. The Philippines is disproportionately exposed to recent energy price spikes amid the Iran war compared to other Asian countries—95% of its oil imports come from the Middle East versus 65% on average in Asia. Moreover, the recent corruption scandal tempered fixed investment, and while an uptick in public spending will have counterbalanced the decline in outlays, the boost will likely be temporary due to government fiscal consolidation plans. On the external front, net exports swung into decline, shaving 0.2 percentage points off GDP growth, as Philippine exports seem to be benefiting less from the ongoing boom in AI demand than regional peers.

Panelist insight: United Overseas Bank’s Julia Goh and Loke Siew Ting said: “In light of the disappointing 1Q26 GDP performance and the unresolved Middle East conflict that is likely to prolong oil & gas supply disruption and cost pressures, we cut our 2026 GDP growth forecast to 3.2% (from 5.0% previously, 2025: 4.4%), the slowest since the pandemic. […] Growth momentum is further at risk from anticipated El Niño effects from June onwards, alongside lingering drag from publicsector corruption scandals.” ING’s Deepali Bhargava commented: “We believe government spending will need to increase more meaningfully for second-round effects on consumption and investment to materialise. Recent data suggests that rising unemployment and sharply elevated inflationary pressures are likely to keep private consumption suppressed, as households boost precautionary savings.”

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