THE Philippine economy ended 2025 with a growth rate of 4.4 percent, falling short of the Marcos administration’s 5.5 percent to 6.5 percent target for the year.
This came after the economy posted three percent year-on-year growth in the fourth quarter of 2025.
The latest outturn marked the third straight year the country missed its economic growth target.
Economic growth stood at 5.7 percent in 2024, below the six percent to 6.5 percent goal, and 5.5 percent in 2023, lower than the six percent to seven percent target, as climate-related disruptions, governance reforms, and lingering global uncertainties weighed on domestic demand.
In a statement on Thursday, Jan. 29, 2026, Department of Economy, Planning and Development Secretary Arsenio M. Balisacan said the outturn reflected a confluence of factors, including weather- and climate-related shocks that led to repeated class and work suspensions, the rationalization of infrastructure projects to ensure quality and value for money, and weakened investor confidence following the flood control corruption controversy.
On the demand side, fourth-quarter exports of goods rose 22.8 percent, imports of services increased by 4.2 percent, household consumption grew by 3.8 percent, and government spending expanded by 9.1 percent.
For the full year, exports of goods grew by 14.1 percent, government consumption by 9.1 percent, and imports of services by 6.1 percent.
Despite the near-term drag on growth, Balisacan said investigations into the flood control scandal were necessary to strengthen accountability, improve project quality, and ensure better use of scarce public resources — reforms viewed as foundational for faster and more sustainable growth over the medium term.
Looking ahead, he said the government is positioning 2026 as a “rally point,” with renewed emphasis on restoring public trust through visible improvements in governance and public services.
Infrastructure projects are being resumed and fast-tracked alongside stricter anti-corruption safeguards, while longer-term, science- and technology-based master planning is being strengthened.
He added that the government will also leverage the Philippines’ 2026 ASEAN chairship to position the country as a competitive business and tourism destination, with faster interagency coordination on travel facilitation, digital visitor services, and destination readiness to support multi-country travel and expand opportunities for micro, small, and medium enterprises.
The government targets gross domestic product (GDP) growth of five to six percent this year and 5.5 percent to 6.5 percent in 2027, with export growth targets of two percent and three percent, respectively. The foreign exchange assumption for both years is P58.60 to the dollar.
Economic recovery in Q2
In a briefing, Balisacan said a return to at least five percent growth is possible by the second quarter, noting that achieving the full-year target would require growth to reach that level by then.
“That’s the goal anyway — to reach five to six percent for the entire year. On exactly what month or quarter, it’s something I couldn’t say, but yes, to be able to go to five to six percent, you have to grow five percent by the second quarter,” he said. / PNA/ KOC