Philippine growth slows to 2.1% in Q3 as household spending cools and public construction falls
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Key points
- The PSA said real GDP grew 2.1% year on year in July–September, down from a revised 2.4% in Q2 2026 and 4.0% in Q3 2025.
- Household consumption grew 2.4%, down from 2.9% in Q2 2026, and gross capital formation changed −0.2%, while exports grew 8.6%.
- Growth is well below Indonesia's 5.47% and Malaysia's 5.3%, and comes with inflation at 7.8% in October.
Implications for lenders
With household consumption growing 2.4% and inflation at 7.8%, borrowers' spare income may be shrinking even as consumer loans grow 16.2%. Lenders may want to re-check affordability for new loans and watch early arrears in segments tied to construction and agriculture.
Implications
Facts
The Philippine Statistics Authority (PSA) reported on 9 November that real GDP grew 2.1% year on year in the third quarter, down from a revised 2.4% in Q2 2026 and 4.0% in Q3 2025. 1 The second-quarter figure was revised up from a first estimate of 2.3% to 2.4%. 2 Growth for January–September was 2.5%, down from 4.9% in January–September 2025. 3
On the expenditure side, household final consumption grew 2.4%, down from 2.9% in Q2 2026. 4 Gross capital formation changed −0.2%. 5 Department of Economy, Planning and Development (DEPDev) Secretary Arsenio Balisacan said public construction changed −15.1% year on year, a smaller decline than the 33.4% drop in Q2 2026. 6 Exports of goods and services grew 8.6%. 7
On the production side, services grew 3.7% 8, while agriculture, forestry and fishing shrank −4.8%. 9 The government's growth target for 2026 is now 3.5%–4.5%. 10
Analysis
Time series: year-on-year growth has slowed in each of the last four quarters, from 4.0% in Q3 2025 to 3.0% in Q4 2025, 2.8% in Q1 2026, 2.4% in Q2 and 2.1% now. Household consumption, the main driver of retail loan demand, grew 2.4%, roughly in line with the economy, while exports held up.
Cross-country: in the same quarter Indonesia grew 5.47% and Malaysia 5.3% (advance estimate), so the Philippines is now the slowest of the three large maritime economies by a wide margin. The slowdown comes with inflation at 7.8% in October and a BSP policy rate of 5.50%, while consumer loans grew 16.2% in September. Outstanding consumer loans (a nominal measure) are growing much faster than real household spending, while prices weigh on real incomes.
| 2025Q3 | 4 |
|---|---|
| 2025Q4 | 3 |
| 2026Q1 | 2.8 |
| 2026Q2 | 2.4 |
| 2026Q3 | 2.1 |
Real GDP, year on year, quarterly, PSA estimates as published with the Q3 2026 release · Source: PSA Q3 2026 national accounts (via Astig.ph and Philippine Canadian Inquirer) (2025Q3, 2025Q4, 2026Q1, 2026Q2, 2026Q3) Earlier quarters include PSA revisions published up to the Q3 2026 release.
Counterpoints and uncertainties
The Q3 figure is a first estimate and the PSA already revised Q2; revisions can change the trend. Exports and government programmes could lift Q4 growth, and the government still sees a path to 3.5%–4.5% for the year. National accounts do not show how lower-income borrowers are faring; labour and arrears data matter more for credit risk.
Key figures
- Real GDP growth (PSA): 2.1% (down from a revised 2.4% in Q2 2026 and 4.0% in Q3 2025). Real GDP, year on year, quarterly, PSA. Philippines. Basis date: 30 Sep 2026. Source: Philippine Canadian Inquirer: Philippine economic growth slows to 2.1% in Q3 2026 (2026-11-09)
- Real GDP growth, Q2 2026 (revised): 2.4% (revised up from a first estimate of 2.3%). Real GDP, year on year, quarterly, PSA revised estimate. Philippines. Basis date: 30 Jun 2026. Source: Philippine Canadian Inquirer: Philippine economic growth slows to 2.1% in Q3 2026 (2026-11-09)
- Real GDP growth, January–September 2026: 2.5% (down from 4.9% in January–September 2025). Real GDP, year on year, first nine months, PSA. Philippines. Basis date: 30 Sep 2026. Source: PhilNews: Philippine GDP Q3 2026 — economy slows to 2.1% (2026-11-09)
- Household final consumption growth: 2.4% (down from 2.9% in Q2 2026). Real household final consumption expenditure, year on year, PSA. Philippines. Basis date: 30 Sep 2026. Source: PhilNews: Philippine GDP Q3 2026 — economy slows to 2.1% (2026-11-09)
- Gross capital formation growth: −0.2%. Real gross capital formation, year on year, PSA. Philippines. Basis date: 30 Sep 2026. Source: Philippine Canadian Inquirer: Philippine economic growth slows to 2.1% in Q3 2026 (2026-11-09)
- Public construction growth: −15.1% (a smaller decline than the 33.4% drop in Q2 2026). Real public construction, year on year, as cited by the DEPDev Secretary. Philippines. Basis date: 30 Sep 2026. Source: PhilNews: Philippine GDP Q3 2026 — economy slows to 2.1% (2026-11-09)
- Exports of goods and services growth: 8.6%. Real exports of goods and services, year on year, PSA. Philippines. Basis date: 30 Sep 2026. Source: Philippine Canadian Inquirer: Philippine economic growth slows to 2.1% in Q3 2026 (2026-11-09)
- Services sector growth: 3.7%. Real gross value added of services, year on year, PSA. Philippines. Basis date: 30 Sep 2026. Source: Philippine Canadian Inquirer: Philippine economic growth slows to 2.1% in Q3 2026 (2026-11-09)
- Agriculture, forestry and fishing growth: −4.8%. Real gross value added of agriculture, forestry and fishing, year on year, PSA. Philippines. Basis date: 30 Sep 2026. Source: Philippine Canadian Inquirer: Philippine economic growth slows to 2.1% in Q3 2026 (2026-11-09)
- Government 2026 GDP growth target: 3.5%–4.5% (lowered target, as reported). Government full-year 2026 real GDP growth target. Philippines. Basis date: 9 Nov 2026. Source: Astig.ph: Philippine GDP growth slows to 2.1% in Q3 (2026-11-09)
Sources
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A Japanese version of this article is available: 日本語版