Philippines falls further behind ASEAN neighbors as Q3 growth slows

The Philippines continued to trail its Southeast Asian neighbors in economic growth after posting a disappointing 2.1% expansion in the third quarter, with several regional economies recording more than twice its pace.

In a research note, China Banking Corp. (China Bank) cited Vietnam as the region’s fastest-growing economy at 10%, followed by Indonesia at 5.5%, Singapore at 5.4%, and Malaysia at 5.3%.

The Philippine economy’s performance puts it further behind its regional peers, as domestic demand and public infrastructure spending continue to weigh on growth.

China Bank expects the economy to remain weak, if not deteriorate further, in the fourth quarter, making it unlikely for the country to hit even the lower end of the government’s 3.5% to 4.5% growth target for 2026.

The bank said the economy would need to expand by an unrealistic 6.3% in the final quarter to meet the target’s lower threshold. It now projects full-year growth at just 2.6%, down sharply from 4.4% in 2025.

Elevated living costs are expected to keep household spending subdued, while weak public infrastructure spending and higher interest rates could further weigh on investment.

China Bank also expects the Bangko Sentral ng Pilipinas to exercise greater caution on further rate hikes, even if inflation climbs to around 8% in November.