The Philippine economy grew by just 2.1 per cent in the third quarter of 2026, its slowest pace since the pandemic, the Philippine Statistics Authority (PSA) reported on Monday, as high food and energy prices squeezed households and farm output shrank.

The figure was down from a revised 2.4 per cent in the second quarter and 4 per cent in the same period last year, and it fell short of the 3 per cent growth economists had expected in a Reuters poll. It was the weakest growth since the first quarter of 2021, when the economy contracted by 3.8 per cent during the coronavirus pandemic, and the fifth consecutive quarter in which growth has slowed.

On a seasonally adjusted basis, the economy grew by only 0.1 per cent from the previous quarter, after expanding 0.6 per cent in the April-to-June period. Gross national income, which includes earnings from abroad, rose 2.7 per cent, slower than the 5.4 per cent recorded a year earlier.

Households and farms under pressure

Household spending grew by only 2.4 per cent in the quarter, as families cut back in the face of rising prices. Inflation was running at close to 8 per cent in October, while unemployment stood at 5.4 per cent in September, adding to the strain on purchasing power.

Agriculture, forestry and fishing recorded the steepest contraction among the major industries, shrinking by 4.8 per cent after storms and heavy monsoon rains. Services remained the main engine of growth, expanding 3.7 per cent, while industry was broadly flat. The main contributors to growth were wholesale and retail trade, public administration and defence, and financial and insurance activities, according to the PSA.

Investment also weakened during the quarter, squeezed by tighter financing conditions after the central bank raised its policy rate. Public construction fell for a sixth consecutive quarter, a decline linked to investigations into alleged incomplete or substandard flood-control projects.

Full-year target now looks out of reach

The third-quarter result brought average growth in the first nine months of the year to 2.5 per cent, well below the government’s full-year target of 3.5 to 4.5 per cent. Arsenio Balisacan, secretary of the Department of Economy, Planning and Development, said the economy would need to expand by at least 6.3 per cent in the fourth quarter to reach the lower end of that target, and acknowledged that it would now be challenging to meet.

Mr Balisacan pointed to high food and energy prices and tighter financing as the main drags on the economy, and said recovery would need stronger investment, easing prices and renewed business confidence. Economists quoted in local media warned that three straight quarters of growth below 3 per cent, alongside stubbornly high inflation and rising unemployment, raised the risk of stagflation — weak growth combined with high prices.

The government’s budget coordination committee is expected to meet before the end of the year to revisit the growth targets, with the administration already expecting growth of between 4 and 5 per cent a year from 2027 to 2030.