MANILA – Malacañang on Friday said it expects the Philippine economy to regain momentum in the second half of 2026 as the government steps up public spending and speeds up budget releases, insisting that the slower-than-expected second-quarter gross domestic product (GDP) growth is “only temporary.”
The Philippine economy grew by 2.3 percent in the second quarter of 2026, slower than the 5.5-percent growth recorded in the same period in 2025 and the slowest since the Covid-19 pandemic.
Palace Press Officer Claire Castro said the latest GDP figure fell short of expectations but does not define the country’s long-term economic trajectory.
Castro attributed the slower growth to the effects of the Middle East crisis on inflation, fuel prices, employment, and remittances, as well as the temporary slowdown in public construction, while the administration intensifies its anti-corruption campaign, particularly against anomalous flood control projects.
"This slowdown is only temporary," she 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 as well."
Castro said government spending has already grown by 8.3 percent as the administration prioritizes assistance to families most affected by rising prices.
In the second half of 2026, she said the government will push measures to accelerate economic growth by fast-tracking high-impact infrastructure projects, maintaining price stability, and sustaining targeted assistance for vulnerable sectors.
These include the expansion of the UPLIFT assistance program to cover 7.5 million families, the PHP12-per-liter fuel subsidy program, and the Bawat Bayan Makikinabang Rice Program.
Castro also said the government is working to expand exports and enhance the country’s competitiveness while positioning the Philippines to benefit from the global artificial intelligence (AI) and digital economy boom, including through its membership in the Pax Silica coalition.
She likewise cited key measures endorsed by the Legislative-Executive Development Advisory Council (LEDAC) to support the middle class and boost domestic consumption, including the proposed increase in the personal income tax exemption threshold to PHP350,000.
Other priority measures include amendments to the Electric Power Industry Reform Act (EPIRA) prohibiting distribution utilities and electric cooperatives from passing system loss charges and the corresponding value-added tax (VAT) to consumers, the Sariling Kuryente Act, an exemption from the minimum corporate income tax (MCIT) for small businesses, a general tax amnesty, and the abolition of the travel tax.
Castro also highlighted positive economic indicators despite the weaker GDP performance, among them the 12.2 percent growth in exports driven by strong global demand for electronics, semiconductors, AI-related products, and agricultural goods. Agriculture expanded by 2.7 percent, while travel exports increased by 12.6 percent.
She added that merchandise exports posted double-digit growth for the fifth consecutive quarter, while manufacturing expanded by 2.6 percent, indicating sustained industrial activity despite slower construction.
"Although consumer confidence is still low, businesses are starting to improve," she said.
"Manufacturing activity continues to expand, supported by strong global demand for technology products and the expected recovery of infrastructure spending," Castro added. (PNA)
