ECONOMIC growth likely slowed further in the fourth quarter as a massive corruption scandal continued to weigh on spending and sentiment, analysts said, dragging the full-year result to well below target.
The median forecast was 3.7 percent for the October-December period, lower than the third-quarter slowdown to 4.0 percent from 5.5 percent in April-June and the 5.4 percent seen in the first three months of the year.
If realized, 2025 gross domestic product (GDP) growth would average 4.6 percent, well below the 5.5- to 6.5-percent goal and markedly down from 2024’s 5.7 percent. It would also extend a run of missed growth targets to three years.
Preliminary fourth quarter and full year data will be released by the Philippine Statistics Authority this Thursday.
‘Lingering effects’
With the lowest forecast of 3.2 percent, Philippine National Bank economist Alvin Arogo said GDP growth would have slowed further “due to the sustained decline in public construction, tapering of government spending post election, easing of front-loading boost to exports and dip in consumer confidence.”
Chinabank Research and Union Bank of the Philippines chief economist Ruben Carlo Asuncion, meanwhile, both saw growth slowing to 3.6 percent in the fourth quarter.
“The lingering effects of the flood control corruption probe continued to weigh on public construction and sentiment in Q4, with slumping fiscal expenditures and a soft labor market limiting the usual holiday uplift,” Asuncion said.
“Our high‑frequency indicators show that consumption, investment activity, and confidence all remained subdued as governance concerns and tighter project validation carried over from the third quarter,” he added.
This was echoed by Chinabank Research, which said household consumption may have also remained subdued as “weaker consumer confidence — partly due to governance-related concerns — tempered spending.”
“Additionally, strong typhoons during the quarter may have constrained consumption activities and weighed on agricultural output, particularly palay production,” it added.
HSBC Global Research economist Aris Dacanay also said the public infrastructure spending fallout was likely the largest drag, pulling growth down to 3.7 percent in the fourth quarter.
He warned of a spillover to household spending, noting that around a tenth of the labor force was in construction, a sizable portion that might have felt some form of economic uncertainty.
“In fact, consumer surveys suggest that households are now more inclined to increase their savings to insure themselves from the uncertainty brought by the ongoing corruption investigations in public infrastructure projects,” Dacanay said.
Modest improvement
Three economists, on the other hand, said growth could have rebounded in the fourth quarter despite the drag caused by the corruption scandal.
Sun Life Investment Management and Trust Corp. economist Patrick Ella said the expansion could have edged up to 4.2 percent despite weak consumer spending and the political climate having held private investments back.
Pantheon Macroeconomics economist Miguel Chanco forecast an improvement to 4.4 percent on the back of private consumption and net exports while government spending and fixed investment remained weak.
“In terms of the measures the government can do to help growth recover — it’s quite clear that the problem is weakening private domestic demand (both in terms of consumption and investment),” he said.
“A few things the government could then contemplate in the near term is targeted fiscal support for households, particularly those in the low-income segment and, on investment, more clarity on the short-and-medium term future of public infrastructure projects, where the country’s structural deficiencies remain immense.”
With the highest forecast of 5.3 percent, Moody’s Analytics economist Sarah Tan said that “robust demand for electronics appears to have supported export growth toward the end of the year.”
“However, extreme weather-related damage weighed on economic activity, particularly through disruptions to agriculture, infrastructure, and household consumption,” she added.
“In addition, government integrity involving flood control projects likely undermined business confidence, weighing on investment.”
Tan said the government should prioritize better governance and stronger climate resilience, adding that greater transparency and accountability in public projects would help restore business confidence and encourage investment.
“At the same time, investing in climate-resilient infrastructure and disaster preparedness would reduce economic disruptions from extreme weather, supporting more stable growth,” she added.
All but certain miss
Economic managers have already said that growth would have fallen below target last year. Earlier this month, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said it could have hit 4.6 percent while Socioeconomic Planning Secretary Arsenio Balisacan said growth likely settled at 4.8-5.0 percent.
Targets for this year and the next have already been lowered amid continued global uncertainties and the lingering impact of the corruption scandal.
“The reason for the scaling down,” Balisacan said, “arose from the realities that we have seen and we have been seeing, both globally and domestically.”
The 2025 target has been cut to 5.0-6.0 percent while that for 2027 is now 5.5-6.5 percent, down from the 6.0-7.0 percent set by the interagency Development Budget Coordinating Committee in June last year. The target for 2028 was kept at 6.0 percent to 7.0 percent.
This Thursday’s growth results will also factor in the BSP’s first policy meeting for 2026 on Feb. 19. Its last two rate cut decisions noted that the outlook for domestic growth had weakened and Remolona on Friday said that a weaker-than-expected fourth quarter could influence policy.
“If it (growth) would turn out to be weaker than expected, it would help us decide to cut,” he told reporters.
