A SLOWDOWN in public construction spending, along with the global energy shock caused by the Middle East war, will have weighed on first-quarter Philippine economic growth, analysts polled by The Manila Times said.
The median forecast of 3.3 percent, while an improvement from the 3.0 percent seen in the last three months of 2025, is well below the government’s 5.0- to 6.0-percent target for this year. It is also markedly lower than the 5.4 percent recorded in January-March 2025.
Gross domestic product (GDP) growth slumped to 4.4 percent in 2025 as a massive corruption scandal disrupted government spending and weighed on consumer and investor sentiment. The flood control project mess prompted downward revisions to the government’s growth goals, which will likely again be lowered as the Middle East war remains unresolved.
Socioeconomic Planning Secretary Arsenio Balisacan last week said the “unforeseen development” that was the US-Israel war on Iran meant growth would be “slower” and understandably not “better than what you had in the previous quarters.”
Preliminary first-quarter growth results will be released by the Philippine Statistics Authority this Thursday, May 7. Balisacan said the interagency Development Budget Coordination Committee, which sets the government’s macroeconomic goals, would be meeting shortly after to review its assumptions.
With the lowest forecast of 2.9 percent, Security Bank Corp. chief economist Angelo Taningco said stronger-than-expected construction and manufacturing could have supported growth amid weaker household spending and investments.
HSBC Global Research senior economist Aris Dacanay said growth likely slowed to 3.2 percent, mainly due to weaker public construction spending and its impact on consumption.
“The growth outlook remains challenging, with higher energy and food costs taking a further toll on consumption,” he said.
Chinabank economist Domini Velasquez and Philippine National Bank economist Alvin Arogo, meanwhile, both said growth could have hit 3.3 percent.
Arogo said this would reflect weak consumer and business confidence, driven by an ongoing corruption probe and uncertainties from the Middle East war.
Velasquez echoed this, saying: “Weak consumer confidence evident last year appears to have persisted. This was compounded by rising consumer prices, particularly for oil, a softening labor market, and moderating remittance inflows, all of which further reduced Filipinos’ purchasing power.”
“Investment activity also likely remained subdued, with public infrastructure spending still weak and private investment in durable goods constrained by muted business sentiment.”
Meanwhile, ANZ Research said growth could have slowed to 3.4 percent as government spending had yet to recover from the corruption scandal.
“Manufacturing was supported by steady export demand over the quarter, but government infrastructure spending was subdued, lowering growth,” it said.
“Ahead we expect elevated fuel prices will weigh on both consumption and production.”
Pantheon Macroeconomics economist Miguel Chanco said he expected a rebound to 3.8 percent from three months earlier but added that growth was likely to remain subdued for some time.
“Our reading of the data suggests that the slump in public investment caused by the anti-corruption drive late last year is finally turning a corner, and this should be behind most of the bounce we expect to see in next week’s GDP report,” he said.
Moody’s Analytics economist Sarah Tan, who offered the highest forecast of 3.9 percent, said the economy was being “increasingly exposed to external headwinds, especially the spillovers from Middle East conflict which have disrupted supply chains, oil supply and kept domestic prices elevated.”
“These would have taken a significant toll on consumers’ purchasing power, business sentiments and exports in the first quarter.”
