THE Philippine economy grew by 4.4 percent in full-year 2025, falling short of the government’s growth target of 5.5 to 6.5 percent for the year.
Based on data from the Philippine Statistics Authority (PSA), the country’s gross domestic product (GDP), which is the total value of all goods and services produced within a country over a specific period, expanded by 3.0 percent year-on-year in the fourth quarter of 2025, slower than earlier quarters.
In the fourth quarter, the PSA said the main drivers of growth were wholesale and retail trade, including the repair of motor vehicles and motorcycles, which grew by 4.6 percent; financial and insurance activities at 5.6 percent; and public administration and defense, including compulsory social security, which posted a 7.9 percent increase.
For the entire year, wholesale and retail trade remained the biggest contributor to economic expansion with 5.2 percent growth, followed by financial and insurance activities at 5.8 percent, and manufacturing at 2.5 percent.
By major economic sector, services continued to anchor growth, expanding by 5.2 percent in the fourth quarter and 5.9 percent for the full year.
Agriculture, forestry, and fishing (AFF) posted modest gains of 1.0 percent in the fourth quarter and 3.1 percent for the year.
Industry, however, weighed on overall performance, contracting by 0.9 percent year-on-year in the fourth quarter. For the whole of 2025, the sector recorded growth of just 1.5 percent.
On the demand side, household final consumption expenditure (HFCE) rose by 3.8 percent in the fourth quarter, while government final consumption expenditure (GFCE) increased by 3.7 percent.
External trade posted strong numbers, with exports of goods and services jumping by 13.2 percent and imports rising by 3.5 percent during the period.
These gains were partly offset by a steep 10.9 percent decline in gross capital formation.
For the full year of 2025, HFCE grew by 4.6 percent and GFCE by 9.1 percent. Exports expanded by 8.1 percent, while imports rose by 5.1 percent. Gross capital formation, however, still posted an annual decline of 2.1 percent.
Despite slower GDP growth, Gross National Income (GNI) increased by 3.9 percent year-on-year in the fourth quarter, bringing full-year growth to 6.1 percent.
Net primary income from the rest of the world surged by 10.9 percent in the fourth quarter and by 19.1 percent for the entire year.
In a statement, Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan said the country’s full-year 2025 GDP outcome reflects several converging factors, which include the adverse economic effects of weather- and climate-related disruptions that led to unexpected class and work suspensions.
Balisacan said the government is strengthening adaptation efforts to address climate change-related disruptions, which include disaster preparedness, enhanced early warning systems, and stronger capabilities for the weather bureau and local weather stations.
He also noted the restored funding for the Project Nationwide Operational Assessment of Hazards, or Project NOAH.
“We are also boosting investments in climate-resilient agricultural inputs, technologies, and infrastructure to raise farm productivity, ensure food security, and support sustained export growth,” Balisacan said.
Balisacan also cited flood control corruption as one of the factors affecting the unfavorable GDP performance in 2025.
“Admittedly, the flood control corruption scandal also weighed on business and consumer confidence. These challenges unfolded alongside lingering global economic uncertainties,” he said.
“While these developments weighed on short-term growth, the Marcos Administration emphasizes that the investigations into the flood control corruption controversy had to be undertaken. The resulting measures and governance reforms are necessary to strengthen accountability, improve project quality, ensure better value for scarce public resources, and build our capacity for faster and more sustainable growth in the years ahead,” he added.
Balisacan said the administration is also working double time to accelerate efforts to restore public trust through improvements in governance and public services.
He also noted the resumption and acceleration of public works completion while enforcing stricter anti-corruption safeguards.
“At the same time, we are pursuing long-term and high-impact reforms in infrastructure development planning, guided by comprehensive, science- and technology-based master plans,” Balisacan said.
To strengthen accountability, Balisacan said the government is also prioritizing the implementation and passage of key legislative reforms such as the newly enacted New Government Procurement Act, the proposed Anti-Dynasty Bill, and amendments to the Party-List System Reform Act, the Bank Deposits Secrecy Law, and the Anti-Money Laundering Act.
“In closing, allow me to reiterate that while the reform efforts we have begun—and continue to pursue—have affected recent growth performance, they are necessary and critical steps. These reforms protect public funds, strengthen our institutions, build a more resilient, inclusive economy, and ultimately rebuild trust between government and the people we serve,” Balisacan said.
“With discipline, better governance, and sustained reforms, we are decisively moving to ensure that growth in 2026 and beyond is stronger, more inclusive, more resilient—and truly felt by all Filipinos,” he added. (TPM/SunStar Philippines)