MALACAÑANG said on Friday, Aug. 7, 2026, it expects the Philippine economy to regain momentum in the second half of 2026 as the government accelerates public spending and budget releases, describing the weaker-than-expected second-quarter gross domestic product (GDP) growth as temporary.
The economy expanded by 2.3 percent in the second quarter, slowing from 5.5 percent a year earlier and marking its weakest growth since the Covid-19 pandemic.
Palace Press Officer Claire Castro said the latest GDP result fell short of expectations but does not reflect the country’s long-term economic prospects.
She attributed the slowdown to the impact of the Middle East conflict on inflation, fuel prices, employment and remittances, as well as slower public construction while the administration intensified its anti-corruption drive, particularly against irregular flood control projects.
“This slowdown is only temporary,” Castro said in a statement. “As the government continues to speed up spending and release budgets more quickly, we hope the economy can start to pick up in the second half of the year.”
Government spending has already risen by 8.3 percent, she said, as the administration prioritized assistance for households affected by rising prices.
To support growth, the government will fast-track major infrastructure projects, maintain price stability and expand social assistance programs, including the Uplift program for 7.5 million families, the P12-per-liter fuel subsidy and the Bawat Bayan Makikinabang Rice Program.
Castro said the administration will also work to boost exports and improve competitiveness while positioning the Philippines to benefit from the artificial intelligence (AI) and digital economy through initiatives such as the Pax Silica coalition.
She added that the government is pursuing legislative measures to stimulate domestic demand, including raising the personal income tax exemption threshold to P350,000, exempting small businesses from the minimum corporate income tax, granting a general tax amnesty, abolishing the travel tax and amending the Electric Power Industry Reform Act to bar utilities from passing system loss charges to consumers.
Despite the weak GDP growth, Castro cited positive indicators, including a 12.2 percent rise in exports driven by electronics, semiconductors, AI-related products and agricultural goods. Agriculture grew by 2.7 percent, travel exports increased by 12.6 percent, while manufacturing expanded by 2.6 percent.
“Although consumer confidence is still low, businesses are starting to improve,” she said, citing sustained manufacturing activity and the expected recovery in infrastructure spending. / PNA
