Philippine Economic Growth Reaches 4.4% in 2025, Falling Below Government Target
The Philippine economy recorded a growth rate of 4.4 percent for the entire year of 2025, according to official data released by the Philippine Statistics Authority. This figure represents a significant shortfall from the government's ambitious target range of 5.5 to 6.5 percent growth for the year, highlighting various economic challenges faced during the period.
Quarterly Performance and Sectoral Analysis
In the fourth quarter of 2025, the country's Gross Domestic Product expanded by 3.0 percent year-on-year, marking a slowdown compared to earlier quarters. The PSA identified several key sectors that drove economic activity during this period:
- Wholesale and retail trade, including motor vehicle and motorcycle repair, grew by 4.6 percent
- Financial and insurance activities increased by 5.6 percent
- Public administration and defense, including compulsory social security, posted a substantial 7.9 percent increase
For the full year, wholesale and retail trade remained the largest contributor to economic expansion with 5.2 percent growth, followed closely by financial and insurance activities at 5.8 percent. Manufacturing showed more modest growth at 2.5 percent for 2025.
Major Economic Sectors Show Mixed Results
The services sector continued to anchor the Philippine economy, expanding by 5.2 percent in the fourth quarter and achieving 5.9 percent growth for the entire year. Agriculture, forestry, and fishing posted modest gains of 1.0 percent in the final quarter and 3.1 percent for the full year.
However, the industry sector weighed on overall economic performance, contracting by 0.9 percent year-on-year in the fourth quarter. For the whole of 2025, this sector recorded growth of just 1.5 percent, indicating particular challenges in industrial production and related activities.
Demand-Side Indicators and External Trade
On the demand side, household final consumption expenditure rose by 3.8 percent in the fourth quarter, while government final consumption expenditure increased by 3.7 percent. External trade posted strong numbers during this period, with exports of goods and services jumping by 13.2 percent and imports rising by 3.5 percent.
These gains were partly offset by a steep 10.9 percent decline in gross capital formation during the fourth quarter. For the full year of 2025, household consumption grew by 4.6 percent and government consumption by 9.1 percent. Exports expanded by 8.1 percent annually, while imports rose by 5.1 percent. Gross capital formation, however, still posted an annual decline of 2.1 percent.
Gross National Income Shows Stronger Performance
Despite the slower GDP growth, Gross National Income increased by 3.9 percent year-on-year in the fourth quarter, bringing full-year growth to 6.1 percent. Net primary income from the rest of the world surged by 10.9 percent in the fourth quarter and by an impressive 19.1 percent for the entire year, indicating stronger earnings from overseas investments and remittances.
Government Analysis and Response to Challenges
In an official statement, Department of Economy, Planning, and Development Secretary Arsenio Balisacan acknowledged that the country's full-year 2025 GDP outcome reflects several converging factors. He specifically cited the adverse economic effects of weather- and climate-related disruptions that led to unexpected class and work suspensions throughout the year.
"We are strengthening adaptation efforts to address climate change-related disruptions," Balisacan stated. "These include disaster preparedness, enhanced early warning systems, and stronger capabilities for the weather bureau and local weather stations."
The government has restored funding for the Project Nationwide Operational Assessment of Hazards (Project NOAH) and is boosting investments in climate-resilient agricultural inputs, technologies, and infrastructure to raise farm productivity, ensure food security, and support sustained export growth.
Addressing Corruption and Governance Issues
Balisacan also cited flood control corruption as one of the factors affecting the unfavorable GDP performance in 2025. "Admittedly, the flood control corruption scandal also weighed on business and consumer confidence," he acknowledged. "These challenges unfolded alongside lingering global economic uncertainties."
The administration emphasized that while investigations into the flood control corruption controversy affected short-term growth, they were necessary to implement governance reforms. "The resulting measures and governance reforms are necessary to strengthen accountability, improve project quality, ensure better value for scarce public resources, and build our capacity for faster and more sustainable growth in the years ahead," Balisacan explained.
Long-Term Reforms and Legislative Priorities
The government is working to accelerate efforts to restore public trust through improvements in governance and public services. This includes the resumption and acceleration of public works completion while enforcing stricter anti-corruption safeguards.
To strengthen accountability, the government is prioritizing the implementation and passage of key legislative reforms such as:
- The newly enacted New Government Procurement Act
- The proposed Anti-Dynasty Bill
- Amendments to the Party-List System Reform Act
- Revisions to the Bank Deposits Secrecy Law
- Updates to the Anti-Money Laundering Act
"While the reform efforts we have begun—and continue to pursue—have affected recent growth performance, they are necessary and critical steps," Balisacan concluded. "These reforms protect public funds, strengthen our institutions, build a more resilient, inclusive economy, and ultimately rebuild trust between government and the people we serve."
The administration remains optimistic about future growth prospects, stating that with discipline, better governance, and sustained reforms, the Philippines is decisively moving to ensure that growth in 2026 and beyond will be stronger, more inclusive, more resilient, and truly felt by all Filipinos.
