Philippine Economy Expands 4.4% in 2025, Falls Short of Government Targets
The Philippine economy concluded the year 2025 with a growth rate of 4.4 percent, according to official data released on Thursday, January 29, 2026. This figure fell below the Marcos administration's target range of 5.5 percent to 6.5 percent for the year, marking the third consecutive year that the country has missed its economic growth objectives.
Quarterly Performance and Historical Context
The fourth quarter of 2025 saw a year-on-year growth of three percent, contributing to the full-year outcome. This follows previous years where economic growth also lagged behind targets: 5.7 percent in 2024 against a goal of six percent to 6.5 percent, and 5.5 percent in 2023 compared to a target of six percent to seven percent. Department of Economy, Planning and Development Secretary Arsenio M. Balisacan attributed these shortfalls to a combination of factors including climate-related disruptions, ongoing governance reforms, and persistent global uncertainties that have dampened domestic demand.
Key Factors Impacting Growth
In a detailed statement, Secretary Balisacan highlighted several specific challenges that influenced the 2025 economic performance. Weather- and climate-related shocks led to repeated suspensions of classes and work, disrupting productivity. Additionally, the rationalization of infrastructure projects to ensure quality and value for money, along with weakened investor confidence following the flood control corruption controversy, contributed to the slower growth. On the demand side, fourth-quarter data showed exports of goods rising by 22.8 percent, imports of services increasing by 4.2 percent, household consumption growing by 3.8 percent, and government spending expanding by 9.1 percent. For the full year, exports of goods grew by 14.1 percent, government consumption by 9.1 percent, and imports of services by 6.1 percent.
Government Response and Future Outlook
Despite the near-term challenges, Balisacan emphasized that investigations into the flood control scandal are necessary to strengthen accountability, improve project quality, and ensure better utilization of public resources. These reforms are viewed as foundational for achieving faster and more sustainable growth in the medium term. Looking ahead, the government is positioning 2026 as a "rally point" with a renewed focus on restoring public trust through visible improvements in governance and public services. Infrastructure projects are being resumed and fast-tracked alongside stricter anti-corruption safeguards, while longer-term, science- and technology-based master planning is being strengthened.
Leveraging ASEAN Chairship for Economic Boost
In a strategic move, Secretary Balisacan announced that the Philippines will leverage its 2026 ASEAN chairship to enhance the country's appeal as a business and tourism hub. This initiative includes:
- Faster interagency coordination to streamline processes.
- Improved travel facilitation for visitors.
- Enhanced digital visitor services to support tourism.
- Destination readiness to accommodate multi-country travel.
- Expanded opportunities for micro, small, and medium enterprises (MSMEs).
This effort was highlighted during a heritage tour of Old Cebu on January 28, 2026, where ASEAN delegates visited key historical sites such as Magellan's Cross, the Basilica Minore del Sto. Niño, Fort San Pedro, and Museo Sugbo, showcasing the country's rich cultural assets to potential investors and tourists.
Growth Targets and Recovery Projections
The government has set ambitious targets for the coming years, aiming for gross domestic product (GDP) growth of five to six percent in 2026 and 5.5 percent to 6.5 percent in 2027. Export growth targets are two percent for 2026 and three percent for 2027, with a foreign exchange assumption of P58.60 to the dollar for both years. In a briefing, Balisacan expressed optimism about a recovery, stating that a return to at least five percent growth is possible by the second quarter of 2026. He noted that achieving the full-year target would require growth to reach that level by then, emphasizing the goal of reaching five to six percent for the entire year.
