PH economy slows to 2.8% as spending and investment weaken in Q1 2026

Services hold up growth while agriculture and industry contract as inflation, weak demand, and policy delays weigh on the outlook.

The Philippine economy lost momentum in the first quarter of 2026, growing just 2.8% from 5.4% a year earlier, marking its weakest expansion in years and raising concerns over jobs, consumer demand, and business confidence.

The sectoral split

Services remained the economy’s main engine with 4.5% growth, according to data from the Philippine Statistics Authority. Meanwhile, agriculture, forestry, and fishing contracted by 0.6%. Industry also slipped by 0.1%. These declines point to pressure across sectors that employ millions of Filipinos and feed into food supply, construction activity, and manufacturing output.

On a per capita basis, GDP grew 1.9% while gross national income rose 2.01%, indicating slower gains in household-level income despite continued growth in services. Net primary income from abroad expanded by 4.5%, offering a modest cushion to overall income flows.

Internal vs. external pressures

Government economic managers pointed to the lingering fallout from last year’s flood control controversy, delays in the 2026 national budget, and higher global oil prices triggered by the Middle East conflict as key drags on activity. These factors, they said, have weighed on both public spending and private sector sentiment.

Business leaders and economists warn that softer household spending, a 3% consumption pace, a 3.3% contraction in investments, and inflation at 7.2% are making it harder for growth to hold steady. Exports, however, grew 7.8%, standing out as one of the few bright spots, while agriculture remained under pressure from food inflation dynamics.

Observers note that the slowdown comes alongside signs of caution in capital spending and manufacturing, adding strain on companies, workers, and families already dealing with higher costs and tighter financial conditions.