The Department of Finance (DOF) emphasized that the country’s slower-than-expected gross domestic product (GDP) growth of 4.0% in the third quarter of 2025 is only a temporary hiccup caused by public underspending, assuring that the Philippine economy is poised for a strong comeback in 2026 as spending efficiencies and infrastructure budgeting reform take full effect.

“Although there has been a slowdown in government spending as we continue to address the flood-control corruption controversy, this reflects the administration’s strong resolve for good governance and to spend only on legitimate, high-impact programs and projects,” Secretary Ralph G. Recto said.

“This short-term adjustment will pave the way for more efficient, transparent, and accountable public spending moving forward,” he added.

The Finance Chief stressed that President Ferdinand R. Marcos, Jr.’s major government cleanup is aimed at leading to stronger institutions, better governance, and faster growth in the medium term.

Cases have already been filed against alleged actors in the flood control corruption, and they will be held fully accountable and brought to jail in the coming months.

“As said before, the flood control controversy has also revealed that not all capital expenditures translate into growth. And now that we’re plugging those leaks and reallocating funds to high-impact investments—such as education, healthcare, agriculture, and digitalization—we will only grow faster,” he added.

The government has put in place catch-up measures to keep spending aligned with national priorities and ensure that growth remains broad-based and inclusive.

The programmed PHP 1.307 trillion in disbursements for the fourth quarter of 2025 will serve as a major stimulus to boost year-end and overall economic growth. The bulk of this amount will go to social services, following the directive of President Marcos, Jr. to ensure that every peso spent in the final stretch of the year directly benefits the Filipino people.

Secretary Recto also noted that the Bangko Sentral ng Pilipinas (BSP) has taken timely and appropriate monetary policy measures to support growth.

“We already anticipated a temporary slowdown, which is why the BSP cut policy rates last month to help stimulate economic activity,” he said.

Secretary Recto affirmed that the Philippines remains on a solid footing, with already strong fundamentals and easing inflation, and with improved governance, and sound fiscal and economic policies, will drive a robust economic comeback in 2026.

Growth drivers in Q3 2025

On the production side, growth in Q3 2025 remained broad-based, led by the services sector, which expanded by 5.5% and accounts for 66.7% of the economy.

The services sector is expected to sustain growth for the rest of 2025, supported by a positive outlook in the wholesale and retail trade, professional and business services, real estate and ownership of dwellings, and accommodation subsectors.

The agriculture sector remained a bright spot despite successive typhoons, posting a positive growth of 2.8% from the 2.6% contraction in Q3 2024. The expansion in the sector was primarily attributed to the improvement in palay, poultry, and egg production.

The growth in domestic demand in Q3 2025 was driven by household consumption, which increased at a slower but steady pace of 4.1%.

Meanwhile, net exports provided a boost to the economy, driven mostly by both goods and services exports. Net exports rose by 8.7% in Q3 2025, a reversal from the 0.5% and 34.0% contraction in the previous quarter and Q3 2024, respectively.

Outlook for 2026

The government’s strategy for 2026 will focus on accountable spending, institutional integrity, and high-impact investments that deliver tangible results for Filipinos.

The PHP 6.793 trillion proposed national budget for 2026, which is under ongoing stringent review and deliberation in Congress, is the government’s most powerful tool to deliver the biggest growth and economic benefits to Filipinos next year.

Fiscal discipline and transparency will guide the implementation of this budget. Taxpayers’ money will be directed only to genuine initiatives, eliminating waste and ensuring that every peso delivers measurable results.

Infrastructure will remain a key driver of growth. The Department of Public Works and Highways (DPWH) will implement reforms to ensure a transparent and equitable allocation of infrastructure funds, eliminate project duplication, and strengthen coordination through well-prepared plans, programs of work, and local and regional approvals.

The DPWH will also work closely with Project NOAH and the broader scientific community to guide flood control and disaster-resilience interventions.

Meanwhile, the Department of Transportation (DOTr) and the Department of Tourism (DOT) have started the expansion of Siargao Airport, increasing its capacity from 200 to at least 750 passengers daily, in time for the Association of Southeast Asian Nations (ASEAN) Summit in 2026.

In July 2025, the DOTr and San Miguel Corporation (SMC) also broke ground on the new Caticlan–Boracay Airport, which will be capable of handling up to seven million passengers annually by 2027. These initiatives are expected to boost tourism, connectivity, and regional development.

The government’s game-changing structural reforms in attracting investments, such as the CREATE MORE Act, the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, the Capital Markets Efficiency Promotion Act (CMEPA), and the recently signed Investors’ Lease Act, among others, will sustain the country’s economic momentum.

In November 2025, the Marcos, Jr. administration secured a PHP 50.7-billion investment from Samsung Electro-Mechanics Philippines, the first to benefit from incentives under the CREATE MORE Act.

In addition, discussions are underway with Hanwha Ocean to support the Philippine Navy’s submarine program and with DL Group for small modular reactor (SMR) energy projects—both highlighting the government’s push for advanced, technology-driven investments.

The Philippine Economic Zone Authority (PEZA) continues to attract significant investments, with PHP 175.37 billion in new and expansion projects approved as of October 2025, bringing it closer to its PHP 250-billion target for the year. The Board of Investments (BOI) is likewise reviewing 30 new manufacturing projects worth PHP 33.54 billion, projected to create 1,668 jobs.

To further strengthen trade competitiveness, the Philippines formally applied in August 2025 to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—a major trade pact of 12 Asia-Pacific economies.

Membership in the CPTPP will expand market access, attract high-value investments, enhance the country’s integration into global supply chains, and drive long-term, sustainable growth.