Philippine recovery remains fragile — BPI

The Philippine economy may finally break its four-quarter slowdown in the third quarter of 2026, but the anticipated rebound is unlikely to translate into meaningful relief for households and businesses as weak consumer spending, sluggish investments and weather-related disruptions continue to undermine growth.

In a commentary on Thursday, Bank of the Philippine Islands (BPI) lead economist Emilio Neri Jr. projected economic growth to improve to 3.2 percent from 2.3 percent in the previous quarter, although the recovery remains heavily dependent on government spending and exports rather than stronger domestic demand.

The Philippine Statistics Authority (PSA) is scheduled to release the country’s third-quarter gross domestic product (GDP) figures on Monday, 9 November.

Neri said the projected improvement partly reflects favorable base effects following last year’s public infrastructure spending issues, which began weighing on economic growth in the third quarter of 2025.

However, he cautioned that the recovery would remain shallow and uneven, with external demand and government spending providing most of the support while private domestic demand remains cautious.

Stronger demand for artificial intelligence-related electronics supported exports, while higher government disbursements indicated that efforts to accelerate public spending were beginning to gain traction.

Despite these gains, private construction activity weakened further, while public infrastructure spending continued to contract, albeit at a slower pace.

Household consumption also remained subdued, with conventional vehicle sales and consumer goods imports suggesting that Filipinos continued to limit discretionary purchases amid pressure on purchasing power.

Adding to the economic strain were intensified southwest monsoon rains and successive typhoons that disrupted agriculture, construction, logistics and retail activity.

Citing government data, Neri said agricultural and infrastructure damage from tropical cyclones Luis, Maymay, Neneng and Pilandok, combined with the southwest monsoon, reached approximately P12.4 billion.

Of the total, agricultural losses accounted for P4.1 billion, while infrastructure damage reached P8.3 billion.

The disruptions also threatened to keep food prices elevated, further squeezing household budgets.

Looking ahead, BPI expects economic growth to continue recovering gradually in the fourth quarter, supported by government catch-up spending, resilient electronics exports and seasonal holiday consumption.

“Holiday spending may give consumption a seasonal lift, though household demand is unlikely to rebound strongly while purchasing power remains stretched,” Neri said.

He also identified delayed infrastructure disbursements, persistently weak construction activity and lingering weather-related agricultural damage as major risks to the country’s recovery.