THE country’s economic growth is expected to recover in the third quarter, supported by a pickup in consumption, but may have remained below the government’s target.
The median forecast in a Manila Times poll of economists was 2.8 percent, higher than the 2.3 percent seen in the first three months of 2026 but markedly lower than the 4.0 posted a year earlier.
It is also well below the government’s downwardly revised 3.5- to 4.5-percent target for the year.
Third-quarter gross domestic product (GDP) growth data will be released by the Philippine Statistics Authority today.
With the lowest forecast of 2.2 percent, Unionbank chief economist Ruben Carlo Asuncion said “elevated inflation, weaker household purchasing power, subdued investment and high borrowing costs remained significant drags.”
“A stronger recovery in government spending and exports could provide upside,” Asuncion said.
However, he argued that “persistent inflation, weak consumer and business confidence, weather disruptions and continued softness in investment pose the main downside risks.”
“We expect growth to remain subdued and uneven in the near term, with both domestic and external uncertainties limiting the pace of recovery,” Asuncion said.
‘A small bounce’
Meanwhile, Pantheon Macroeconomics economist Miguel Chanco said the economy could have recovered, posting a 2.6-percent growth in the third quarter.
“I’m expecting only a small bounce... with this rebound flattered to an extent by base effects,” Chanco said.
Chanco said household consumption is expected to recover slightly but remain below average as households continue to face weak finances, rising prices and subdued consumer confidence.
“Investment probably will return to the black after four straight quarters in the red, albeit thanks mainly to low base effects in fixed investment and continued inventory build,” Chanco said.
“The main bright spot from our reading of the data is exports, which are finally benefiting more consistently from the AI-driven boom in semiconductors,” he added.
Security Bank Corp. economist Angelo Taningco also said that household consumption is “still growing modestly” which could lift growth to 2.7 percent in the third quarter.
Taningco said investment remained weak due to limited public construction activity and subdued private-sector confidence. Government spending also grew moderately amid weather disruptions and work suspensions.
Meanwhile, the trade deficit widened despite stronger exports, as elevated oil prices and peso depreciation drove up import costs.
“We do not anticipate PH GDP to meet the government’s target for the year,” Taningco said.
Taningco said they expect a “modest growth recovery this fourth quarter underpinned by holiday spend and more inflows from remittances and tourist arrivals given the relatively cheap local currency.”
‘Elevated prices’
Metrobank chief economist Nicholas Antonio Mapa, meanwhile, said growth remains subdued at 2.8 percent as “overall momentum moderates.”
“Consumption remains constrained as households manage debt and contend with elevated prices,” Mapa said.
“Government spending meanwhile remains soft due to ongoing flood control probe,” he added.
Mapa said private investment remains weak as businesses contend with the BSP’s second round of monetary tightening in less than three years.
“Exports were the lone bright spot with upside shown for mainstay electronics exports,” Mapa said.
HSBC Global Research senior economist Aris Dacanay and Philippine National Bank economist Alvin Arogo both expects growth to hit 3.2 percent.
Arogo said the improvement could be driven by a recovery in transport spending after the initial oil price shock in the second quarter of 2026, as well as a favorable base effect in public construction. However, Dacanay said public investment remained weak and the continued slowdown in public spending was weighing on the broader economy.
“With the labor market weak and inflation — especially food inflation — still high, consumer sentiment remains fragile,” Dacanay said.
“As a result, many households likely cut back on spending, opting to save amid economic uncertainty,” he added.
Rizal Commercial Banking Corp. chief economist Michael Ricafort, who has the highest growth forecast at 3.7 percent, said the expected rebound would partly reflect a lower base of comparison following government underspending, particularly on infrastructure, in the second half of 2025.
“Lower base effects towards the end of 2026 amid possible catch up government spending especially infrastructure... would still support a possible average GDP growth of 3 to 4 percent levels for 2026,” Ricafort said.
