AN ECONOMIST stressed the need to strengthen the Philippines’ manufacturing and agriculture sectors to expand structural growth drivers and support economic recovery this year.
In a report, Bank of the Philippine Islands (BPI) senior vice president and lead economist Jun Neri projected an economic rebound in the second half of the year, with full-year growth seen at 5.1 percent, below the government’s five percent to six percent target.
Consumption remains the economy’s main growth driver, supported by remittances from overseas Filipino workers and the business process outsourcing sector.
Neri explained that consumer spending grew only by 3.8 percent in the last quarter of 2025, the slowest since 2010 outside of the pandemic.
“Negative sentiment likely dampened the appetite for spending, while the relief from lower inflation failed to generate stronger consumption growth,” he said.
Domestic growth in the second half of last year was also weighed down by a decline in government spending following the flood control controversy.
These factors, Neri said, underscore the need to strengthen structural drivers, such as agriculture, manufacturing, and construction, supported by “high-quality infrastructure that enhances the economy’s ability to produce.”
He warned that underlying vulnerabilities would persist unless the country broadens its sources of growth, adding that a more diversified economy would better absorb future shocks.
“Looking ahead, a recovery in 2026 is possible, but it will depend heavily on the government’s response,” Neri said.
“It’s not simply a matter of government increasing its spending. The quality of spending will be critical in restoring confidence and ensuring that public investment translates into productive capacity.” / PNA