Growth could slow but ‘still be a good number’

ECONOMIC growth likely slowed in the third quarter due to weather disruptions and spending delays, although overall performance is still expected to remain solid, a senior Bangko Sentral ng Pilipinas (BSP) official said.

“[T]here could be some moderation… but it will still be a good number,” central bank Deputy Governor Zeno Abenoja said at the sidelines of a Manila Times forum on Friday.

Gross domestic product (GDP) edged up to 5.5 percent in the second quarter, hitting the lower end of the government’s 5.5- to 6.5-percent target for 2025.

Economic managers have warned that the expansion could slow due to the impact of bad weather and a massive corruption scandal that has weighed on infrastructure spending.

Finance Secretary Ralph Recto earlier this month said 2025 growth could slow to 5.4 percent from 5.7 percent last year and that quarterly results could decline up to next year.

Socioeconomic Planning Secretary Arsenio Balisacan also said a third-quarter slowdown was likely but added that the lower end of this year’s target remained achievable.

Preliminary third-quarter GDP data will be released by the Philippine Statistics Authority next week.

Abenoja acknowledged that a July-September slowdown was possible given temporary shocks to production and consumption from successive typhoons.

The National Disaster Risk Reduction and Management Council (NDRRMC) reported last month that the southwest monsoon and three tropical cyclones — Mirasol, Nando, and Opong — had caused an estimated P914.9 million in agricultural losses.

The disasters were said to have affected more than 31,000 farmers and fishers and destroyed over 78,000 metric tons of crops. Infrastructure damage, meanwhile, was pegged at P822.1 million.

The BSP has also warned that GDP growth could slow due to fallout from the flood control project scandal, and Abenoja earlier this month said “there's probably a greater probability that we will be slightly below those targets that have been set by the government.”

The Budget Department has said that government infrastructure spending slowed by 5.6 percent to P798.4 billion in August from P845.3 billion a year earlier.

‘Uneven skies’

SM Investments Corp. economist Robert Dan Roces, who also spoke at the Manila Times forum, said the economy was facing multiple headwinds that included governance issues, tariffs and a weaker peso.

“When you look at the Philippine economy today, it’s like an aircraft flying through uneven skies,” he said.

“Clouds are thick. We have governance probes, tariff risks, and peso volatility. But there’s still lift beneath the wings… and that lift comes from the Philippine household.”

Roces said that domestic consumption remained the “main engine” of economic growth, supported by easing inflation and improving credit conditions.

“As prices cool, households get a bit more breathing space for discretionary spending such as travel, dining, lifestyle upgrades,” he added.

“Momentum should quietly return,” he continued, once public works spending normalizes following this year’s delays.

“Construction and logistics are expected to pick up by the middle of 2026 because public works would probably restart by then after this year’s disruptions,” he said.

“But mind you, we think it will get worse before it gets better. This will be a test of confidence for the Philippine markets.”

Roces also cited external risks such as China’s economic slowdown, fluctuating oil prices, and geopolitical tensions that could weigh on sentiment and trade flows.

“These factors are going to test our flight discipline next year,” he said.

“Growth next year is expected to stay steady — not a surge, but a sustained climb supported by resilient consumers and hopefully the return of private investment.”

The government is aiming to hit 6.0- to 7.0-percent growth next year until 2028. Many observers, however, expect this to be missed, given domestic and global uncertainties.