The Philippine economy grew by 2.8 percent in the first quarter of 2026, a sharp deceleration from the 5.4-percent expansion recorded in the same period last year, according to data released by the Philippine Statistics Authority (PSA) on Thursday, May 7, 2026. The figure also fell below the government’s five percent to six percent growth target for the year.
Services Sector Leads, But Industry and Agriculture Drag
The services sector remained the primary growth driver, expanding by 4.5 percent year-on-year. However, agriculture, forestry, and fishing declined by 0.2 percent, while industry slipped by 0.1 percent, weighing down overall performance.
Key Industry Contributors
- Wholesale and retail trade, including repair of motor vehicles and motorcycles, grew by 4.6 percent.
- Financial and insurance activities increased by 3.4 percent.
- Public administration and defense, including compulsory social security, expanded by 8.6 percent.
Expenditure Side: Household Spending Up, Investments Down
Household final consumption expenditure, a key driver of the economy, rose by 3.0 percent year-on-year. Government spending increased by 4.8 percent, while exports of goods and services climbed by 7.8 percent. Imports also grew by 6.1 percent during the period.
However, gross capital formation, which measures investments in fixed assets and inventories, contracted by 3.3 percent, tempering overall economic growth.
Income Indicators
Gross National Income, which includes overseas income, grew by 3.0 percent year-on-year. Net Primary Income from the Rest of the World, encompassing remittances and income earned abroad, posted a 4.5-percent increase.
The slower-than-expected GDP growth underscores challenges in reviving industry output and boosting investment, even as consumption and services remain resilient.
