By Katherine K. Chan, Reporter
PHILIPPINE economic growth sharply slowed to a post-pandemic low within the fourth quarter of 2025 because the flood control scandal continued to weigh on government spending, investments and consumer spending, dragging full-year expansion below goal for the third straight yr.
The Philippine Statistics Authority (PSA) reported on Thursday that the fourth-quarter gross domestic product (GDP) expanded by 3%, from 5.3% within the fourth quarter of 2024 and the revised 3.9% print within the third quarter of 2025.
The slowdown got here as a surprise because the fourth quarter is often a robust period for growth, because of holiday spending. The most recent print stands out because the weakest fourth-quarter performance in five years or for the reason that 8.2% contraction within the fourth quarter of 2020.
Excluding the pandemic period, it was the worst quarterly growth rate in 16 years or for the reason that 1.8% within the fourth quarter of 2009, but matched the three% within the third quarter of 2011.
On a seasonally adjusted quarter-on-quarter basis, the economy grew by 0.6%.
In 2025, the economy expanded by 4.4%, much weaker than the 5.7% growth in 2024.
This was the weakest pace in five years or when GDP declined by 9.5% in 2020. Excluding the pandemic, it was the slowest growth for the reason that 3.9% expansion in 2011.
The complete-year average also fell below the Development Budget Coordination Committee’s (DBCC) 5.5%-6.5% goal.
The most recent growth likewise turned out weaker than market expectations, as a BusinessWorld poll of 18 economists last week yielded a median estimate of 4.2% for the October-to-December period and 4.8% for 2025.
Economy Secretary Arsenio M. Balisacan said the slower growth reflected the impact of adversarial weather on economic activity and the corruption scandal on consumer and investor sentiment.
“Admittedly, the flood control corruption scandal also weighed on business and consumer confidence. These challenges unfolded alongside lingering global economic uncertainties,” he said during a briefing on Thursday.
Mr. Balisacan, who earlier expected full-year growth to are available in at 4.8-5%, said he didn’t expect such a “sharp” slowdown. Nonetheless, he said economic managers had expected there can be consequences for the reforms that were put in place within the aftermath of the graft scandal.
“It can’t be business as usual. Because otherwise, we can have growth this yr, or last yr, growth could also be higher, but with corruption far and wide, or in infrastructure. That (growth) wouldn’t be expected to last. We might higher have a slowdown, correct the issues, and construct the trust of our people in the federal government,” Mr. Balisacan said.
A scandal linking government officials, lawmakers and personal contractors to multibillion-peso corruption in flood control projects had dragged government spending and household consumption for the reason that third quarter last yr.
WEAK CONSUMPTION
Within the fourth quarter, household consumption, which accounts for over 70% of the country’s GDP, rose by 3.8%, slowing from 4.7% a yr ago and 4.1% within the third quarter. This was the slowest household spending growth for the reason that -4.8% seen in the primary quarter of 2021.
For the full-year, consumption growth slowed to 4.6% from 4.9% in 2024.
Meanwhile, government spending grew by 3.7% within the fourth quarter, weakening from 9% in the identical period in 2024 and 5.8% within the third quarter. It was also the slowest since 2.6% in the primary quarter of 2024.
Of the full, state expenditures in construction declined by 41.9% in the course of the last three months of 2025, as the federal government increased scrutiny over infrastructure projects.
In 2025, government spending grew by 9.1%, faster than 7.3% within the previous yr.
Mr. Balisacan said the federal government’s catch-up plan could help boost public spending, particularly construction, in the primary quarter.
“The discharge of the approval of the budget for 2026 was delayed a bit,” he added. “And so that would even have a negative effect on spending, particularly for public construction.”
PSA data also showed that the country’s gross capital formation, the investment component of the economy, declined by 10.9% within the fourth quarter, the most important drop since early 2021. This was a steeper decline than the -2.8% within the third quarter and a reversal from the 5.5% growth within the fourth quarter of 2024.
For 2025, investments fell by 2.1%.
BETTER EXPORTS
Meanwhile, exports growth provided some relief for the economy because it climbed by 13.2% within the fourth quarter, from 3.2% a yr earlier and seven.4% within the third quarter. For your complete yr, exports grew by an annual 8.1%.
Imports, meanwhile, expanded by 3.5% within the October-to-December period, from 2.7% within the previous yr and three.2% within the previous quarter, bringing its full-year growth to five.1%.
The federal government forecasts goods exports and services exports to rise by 2% and 5%, respectively, this yr.
In keeping with the PSA, the agriculture, forestry, and fishing (AFF) sector posted 1% growth within the fourth quarter, while services expanded by 5.2%. Nonetheless, the industry sector saw a 0.9% contraction within the fourth quarter.
In 2025, the AFF, services and industry sectors grew by 3.1%, 5.9%, and 1.5%, respectively.
National Statistician Claire Dennis S. Mapa said wholesale and retail trade and repair of motorized vehicles and motorcycles were the highest contributors to the country’s expansion.
Meanwhile, the Philippines’ gross national income went up by 3.9% within the fourth quarter. By yearend, it rose by 6.1%, easing from 7.7% in 2024.
The country’s net primary income likewise increased by 10.9% within the October-to-December period, bringing the 2025 average to 19.1%. This slowed from 26.6% within the prior yr.
DELAYED RECOVERY
Meanwhile, Mr. Balisacan said the country’s probabilities for an early rebound might now be lower.
“(W)e see 2026 as a rally point for us,” he said. “And with all these developments going down and our chairmanship of the ASEAN (Association of Southeast Asian Nations), it should have the ability to show the corners around and get the economy back on its track as early because the… second quarter of this yr.”
He noted that the lingering effects of the corruption mess and the delayed approval of the 2026 budget could prevent the economy from recovering in the primary quarter of the yr.
“We don’t expect that growth will get better to its peak in the primary quarter because we expect some still lingering effects of those measures, especially that the budget for this yr was released or was approved late,” he said.
On Jan. 5, President Ferdinand R. Marcos, Jr. signed the 2026 General Appropriations Act, allotting a P6.793-trillion budget for the federal government.
Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said the economic lags experienced within the fourth quarter may proceed to spill over to the country’s near-term growth prospects.
“All this weakness looks set to bleed into the early a part of this yr, as we’ve yet to see any bottoming-out in government infrastructure spending within the monthly numbers, while surveyed expansion plans within the private sector proceed to roll over sharply,” Mr. Chanco said in an e-mailed note.
The outlook for the Philippine economy stays dim, especially if persisting governance issues will likely be left unresolved, ANZ Research Chief Economist for Southeast Asia and India Sanjay Mathur noted.
“Looking forward, growth is prone to remain weak until governance-related issues are resolved, and public spending begins to enhance,” he said in a report. “While support from net exports will likely be sustained over the subsequent few months on account of the AI (artificial intelligence)-related technology cycle, its overall impact will likely be limited.”
Meanwhile, Chinabank Research said the economy’s underperformance within the fourth quarter calls for a more urgent implementation of reforms, adding that the worldwide uncertainties endanger the country’s external position.
“This underscores the necessity to further weather-proof the economy and quickly rebuild public confidence to support domestic demand, especially for the reason that external front faces persisting headwinds from a highly uncertain and volatile global environment,” it said.
This yr, the DBCC is targeting 5%-6% GDP growth.