The Philippine economy grew by 2.1 percent in the third quarter of 2026, its weakest performance since the pandemic, as agriculture contracted and household spending stayed soft, the Philippine Statistics Authority (PSA) reported on Monday.

The result was well below the 4 percent expansion recorded in the same period last year and slower than the revised 2.4 percent growth of the second quarter. It also fell short of the 2.7 percent median forecast in a BusinessWorld poll and the 3 percent forecast in a Reuters poll of economists.

It was the weakest quarterly performance since the economy contracted by 3.8 percent in the first quarter of 2021, during the coronavirus pandemic. Excluding the pandemic years, it was the slowest expansion since the fourth quarter of 2009, when growth was 1.8 percent.

Agriculture and industry drag

Agriculture, forestry and fishing contracted by 4.8 percent in the quarter, reversing 2.9 percent growth a year earlier, after bad weather and damage from tropical cyclones and the southwest monsoon. Industry posted a marginal contraction of 0.003 percent.

Services remained the main growth driver, expanding by 3.7 percent, but that was not enough to offset the declines elsewhere. On a seasonally adjusted basis, the economy grew by just 0.1 percent from the preceding quarter, down from 0.6 percent in the April-to-June period.

Household consumption, traditionally the biggest driver of the Philippine economy, rose by only 2.4 percent, slower than the 4 percent recorded a year earlier. Investment contracted by 0.2 percent amid tighter financing conditions. Gross national income expanded by 2.7 percent, slower than the 5.4 percent of a year earlier, while net primary income from the rest of the world grew by 6.6 percent, down from 16.2 percent.

Growth target now a stretch

The third-quarter result brought average growth in the first nine months of the year to 2.5 percent. Arsenio Balisacan, secretary of the Department of Economy, Planning and Development, said the economy would need to grow by 6.3 percent in the fourth quarter to reach even the lower end of the government's 3.5 to 4.5 percent growth target for 2026.

Balisacan attributed the slowdown partly to high food and energy costs, which he said constrained household spending, alongside weaker investment and weather-related disruption to farm output. He said the government would pursue urgent economic reforms to revive investment, accelerate infrastructure projects and ease rising living costs.

Balisacan added that reaching the government's 5 to 6 percent growth target for 2027 remained possible, provided investment improves, price pressures ease and business confidence recovers. Inflation reached 7.8 percent in October, and the central bank has raised interest rates through the year to contain prices.