BPI sees third-quarter GDP growth topping 3 percent
Gross domestic product (GDP) growth may reach 3 percent in the third quarter of 2026, fueled by a narrower infrastructure spending gap, Bank of the Philippine Islands (BPI) lead economist Emilio Neri Jr. said.
Neri told reporters on the sidelines of BPI’s 175th anniversary gala dinner on Monday evening that the bank currently estimates GDP growth at “a little over 3” percent, marking a solid rebound from the second quarter’s 2.3 percent growth rate, a 17-year low outside the pandemic years.
“The government construction deficit is no longer as negative as it was before,” he said.
“We're hoping it's going to be minus 10 or minus 5,” he added, noting that the drag on growth from the narrower deficit would be “a little bit less.”
Latest Department of Budget and Management (DBM) data showed that state infrastructure spending slumped for a 14th consecutive month in August, with infrastructure and other capital outlays totaling P522 billion in the first eight months of 2026, down 34.6 percent year on year.
For August alone, public infrastructure spending fell 16.9 percent, or P14.4 billion, to P70.5 billion from P84.9 billion in the same month a year earlier.
“The decrease was largely reflective of the lower DPWH disbursements, as procurement compliance, oversight of ongoing projects, payment claims verification, and contractor documentation were strengthened. These efforts are intended to safeguard the integrity of public infrastructure expenditures by ensuring that payments correspond to properly validated and documented works,” the DBM said.
The department added that construction of school facilities, hospitals and farm-to-market roads, along with Department of National Defense (DND) modernization projects and Department of Transportation (DOTr) rail and mass transport projects, also helped moderate the decline in infrastructure disbursements during the period.
Economists such as Neri have said a rebound in public infrastructure investment should help support an economic recovery. Neri added that stronger GDP growth could give the Bangko Sentral ng Pilipinas (BSP) more room to raise rates in response to rapidly rising inflation, which he said could climb closer to 8 percent in the coming months.
“The hike would be justified,” he said Monday.
BSP Governor Eli Remolona Jr., meanwhile, now expects economic recovery to begin in the first quarter of 2027, pushing back the timeline for a long-awaited rebound in GDP growth following the onset of the flood control scandal last year.
“We expect the economy to recover by Q1 of 2027,” he said after the central bank’s “jumbo” rate hike last Thursday, which Neri was among the few economists to accurately predict.
“We expect fiscal spending to rise. And then with that, sentiment will improve and investment will go up.”