Gross domestic product (GDP) growth likely slowed further to 1.9 percent in the second quarter of 2026 as persistently weak public infrastructure spending, coupled with softer household consumption and private investment amid the ongoing energy shock, continued to weigh on the economy, according to Bank of the Philippine Islands (BPI) lead economist Emilio Neri Jr.

On Friday, Neri said that if BPI’s forecast proves accurate, the 1.9 percent expansion would mark the country’s slowest quarterly economic growth since 2009, excluding the pandemic years.

“Public infrastructure spending continued to weigh heavily on economic activity, contracting by 43.4 percent year on year in the second quarter after a 45.4 percent decline in the first quarter, amid ongoing project delays and slower-than-expected budget execution,” he said.

“Private investment likely softened further, as reflected in weaker building permit approvals and subdued business sentiment, with firms adopting a more cautious stance amid policy uncertainty,” Neri added.

Growth weakened since flood control scandal erupted

Economic growth has weakened significantly since the flood control scandal erupted in the second half of last year, as investigations into the government’s latest corruption controversy triggered a sharp slowdown in public infrastructure spending.

GDP growth slowed for a third consecutive quarter in the first three months of the year, settling at 2.8 percent. Government officials attributed the weaker performance to continued delays in infrastructure spending and the onset of the energy shock in March.

Neri said the second quarter reflected the full economic impact of the US-Iran conflict, which began in March toward the end of the first quarter, as elevated oil prices and heightened geopolitical uncertainty further dampened business confidence and overall economic activity.