THE Philippine economy expanded by four percent year-on-year in the third quarter of 2025, slowing from 5.5 percent in the previous quarter and 5.2 percent in the same period last year, the Philippine Statistics Authority (PSA) reported on Friday.
The moderation in growth was attributed to the impact of government measures addressing anomalies in infrastructure projects and the effects of recent weather disturbances on business activity, according to Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan.
Despite the weaker performance, Balisacan said the government has put in place several measures to rebuild consumer and business confidence and help the domestic economy achieve its potential growth.
These include fast-tracking social and financial aid for disaster-hit communities, pursuing new free trade agreements with the United Arab Emirates, Chile, the European Union, and Canada, and ensuring the full implementation of the Regional Comprehensive Economic Partnership.
He also cited the prioritization of underutilized programs, full utilization of the national budget, and legislative and operational reforms to improve governance and financial management efficiency.
“These factors reflect and affect consumer and business expectations and provide a clear signal for the government to act boldly and decisively,” Balisacan said. “While we may not be able to fully recover the economic losses within the year, we believe these are temporary setbacks. With sustained interventions and improved resilience, we expect the economy to rebound in 2026.”
The DEPDev chief also stressed the need for greater private sector participation in anti-corruption efforts, calling it a “whole-of-society” responsibility.
Balisacan maintained a positive outlook for the economy, citing strong macroeconomic fundamentals, including low inflation, a manageable fiscal deficit, stable currency and banking systems, and favorable demographics. He added that seasonal demand in the last quarter and the steady inflow of overseas Filipino workers’ remittances are expected to boost economic activity.
To meet the government’s full-year growth target of 5.5 to 6.5 percent, the economy must expand between five percent and 6.8 percent in the fourth quarter.
“If we can get at least to the fives, that would be a very good achievement given the shocks that we’ve not anticipated,” Balisacan said.
Key sector and expenditure highlights
Growth in the third quarter was supported mainly by wholesale and retail trade, repair of motor vehicles and motorcycles (five percent), financial and insurance activities (5.5 percent), and professional and business services (6.2 percent).
All major economic sectors posted year-on-year gains: agriculture, forestry, and fishing (2.8 percent), industry (0.7 percent), and services (5.5 percent).
On the demand side, household consumption rose 4.1 percent, government spending increased 5.8 percent, exports grew seven percent and imports expanded 2.6 percent. However, gross capital formation, a key measure of investment, fell 2.8 percent, signaling continued weakness in private sector spending.
The country’s Gross National Income increased 5.6 percent year-on-year, supported by a 16.9 percent rise in net primary income from the rest of the world, reflecting stronger remittance and investment inflows.
Balisacan said the measures being rolled out are expected to improve economic performance in the last quarter of 2025 and set the stage for a stronger rebound in 2026. / KOC WITH PNA REPORT