MANILA — The Philippine economy slowed sharply in the final quarter of 2025, with full-year growth falling below the government’s official target, according to data released on Wednesday by the Philippine Statistics Authority.

Gross domestic product (GDP) grew 3.0% year-on-year in the fourth quarter, the slowest pace since early 2021. For the full year, the economy expanded 4.4%, well below the government’s 5.5%–6.5% growth goal, the PSA said.

Slower momentum at year-end

The fourth-quarter slowdown reflects weakening demand across several parts of the economy. Household consumption growth eased to 3.8%, down from earlier quarters, while government spending rose 3.7%, also slower than previous periods.

The sharpest drag came from investment. Gross capital formation—a measure of spending on buildings, equipment and infrastructure—fell 10.9% in the fourth quarter, signaling that businesses pulled back on expansion plans toward the end of the year.

Full-year growth below target

For all of 2025, the 4.4% expansion marked a deceleration from earlier post-pandemic recoveries and missed official projections set by economic managers. The shortfall suggests softer-than-expected consumer demand and delayed or reduced investment activity.

Despite the slowdown, the economy continued to grow, led mainly by services such as wholesale and retail trade, financial services, and public administration, which remained in expansion territory.

GDP measures the total value of goods and services produced in the country. A 3.0% growth rate means the economy was still larger than a year earlier, but the pace of expansion weakened significantly.

Economists generally consider a recession to involve sustained economic contraction. The Philippines is not in recession, as output is still growing, though at a slower rate.

Why it matters

Missing the growth target can affect government planning. Lower-than-expected growth may weigh on tax revenues and increase pressure on policymakers to support the economy through fiscal spending or interest-rate adjustments in 2026.

The weak investment data also raises concerns about business confidence, as capital spending is closely tied to future job creation and productivity growth.

Economic officials and markets are expected to closely watch upcoming data releases in early 2026 for signs of whether growth stabilizes or continues to soften, particularly as policymakers weigh measures to revive demand.

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