The Philippine economy expanded by 4 percent in the third quarter, the slowest pace in four years, as a recent infrastructure scandal and a string of typhoons weighed on growth, the Philippine Statistics Authority (PSA) reported Friday.

This marks the weakest quarterly performance since the first quarter of 2021, when the economy contracted by 3.8 percent due to strict COVID-19 lockdowns. 

The latest growth figure also fell short of the Marcos administration’s target of 5.5–6.5 percent and was below the 5.2 percent market expectation surveyed by Bloomberg.

GDP growth in the three months ending September dropped sharply from 5.5 percent in Q2 and from 5.2 percent in the same period last year, bringing the year-to-date growth average to 5 percent.

Economist Arsenio Balisacan noted that growth in the services and industry sectors slowed, largely due to delayed infrastructure spending amid ongoing investigations into alleged anomalies in flood control projects.

Household consumption also decelerated to 4.1 percent, affected by typhoon disruptions that dampened spending.

Despite the slowdown, key contributors to Q3 growth included the wholesale and retail trade, repair of motor vehicles and motorcycles at 5%; financial and insurance activities at 5.5%; and professional and business services at 6.2%.

By sector, services posted the highest growth at 5.5 percent, followed by agriculture, forestry, and fishing at 2.8 percent, and industry at a modest 0.7 percent.

Year-end spending to support growth 

Meanwhile, the Department of Budget and Management (DBM) confirmed that the government has about P1.307 trillion in programmed spending for the fourth quarter of 2025, which Budget Secretary Amenah  Pangandaman said will boost year-end economic activity and support overall growth.

The bulk of this spending will target social services, including P9.52 billion for Pantawid Pamilyang Pilipino Program (4Ps) cash transfers, P7.03 billion for Assistance to Individuals in Crisis Situation (AICS) payouts, P5.77 billion for social pensions for indigent senior citizens, and P4.83 billion for the Ayuda sa Kapos ang Kita (AKAP) program.

Other allocations include P203.82 billion for the Department of Education, P31.78 billion for State Universities and Colleges and CHED, P4.89 billion for labor programs, P14 billion for health services, and P528.09 million for OFW programs. Government employees will also receive P63.7 billion in year-end benefits.

As of October 27, the DBM has released P1.133 trillion of these allocations, signaling a strong push to stimulate economic activity in the final quarter.

Coupled with a benign inflation rate of 1.7 percent in October, the slower growth keeps the door open for potential policy rate cuts, which the Bangko Sentral ng Pilipinas (BSP) will review at its Dec. 11 meeting.