Economist Emphasizes Need to Bolster Manufacturing and Agriculture for Philippine Economic Expansion
In a recent analysis, a prominent economist has highlighted the critical importance of reinforcing the Philippines' manufacturing and agriculture sectors to broaden structural growth drivers and bolster economic recovery throughout the current year.
Economic Projections and Growth Challenges
According to a report from the Bank of the Philippine Islands (BPI), senior vice president and lead economist Jun Neri forecasted an economic rebound anticipated in the second half of 2026. Neri projected full-year growth at 5.1 percent, which falls slightly below the government's target range of five percent to six percent.
Neri pointed out that consumption continues to serve as the primary growth engine for the economy, largely sustained by remittances from overseas Filipino workers and the robust business process outsourcing sector. However, he noted a concerning slowdown, with consumer spending increasing by only 3.8 percent in the final quarter of 2025. This marks the slowest growth rate since 2010, excluding periods impacted by the pandemic.
"Negative sentiment likely dampened the appetite for spending, while the relief from lower inflation failed to generate stronger consumption growth," Neri explained.
Factors Weighing on Domestic Growth
The domestic growth trajectory in the latter half of last year faced additional pressures due to a decline in government spending, which was influenced by the flood control controversy. These combined factors underscore the urgent need to strengthen structural drivers within the economy.
Neri emphasized that enhancing sectors such as agriculture, manufacturing, and construction is essential. He advocated for these efforts to be supported by high-quality infrastructure that improves the economy's overall productive capacity.
Call for Economic Diversification and Quality Spending
The economist issued a warning that underlying vulnerabilities will persist unless the Philippines broadens its sources of growth. He stressed that a more diversified economy would be better equipped to absorb future shocks and ensure long-term stability.
"Looking ahead, a recovery in 2026 is possible, but it will depend heavily on the government's response," Neri stated. "It's not simply a matter of government increasing its spending. The quality of spending will be critical in restoring confidence and ensuring that public investment translates into productive capacity."
This perspective highlights a strategic shift towards sustainable economic foundations, moving beyond reliance on consumption alone to foster a resilient and dynamic Philippine economy.
