Philippines GDP Growth Slows to 2.3% in 2Q26

The Philippine economy expanded by just 2.3% year-on-year in the second quarter of 2026, marking the weakest quarterly growth since the pandemic. Government officials described the slowdown as temporary and expect economic activity to strengthen during the second half of the year.

The latest result was significantly below the 5.5% growth recorded in the second quarter of 2025 and also fell short of government expectations.

According to Malacañang Palace Press Officer Claire Castro, several factors contributed to the weaker performance, including the impact of the conflict in the Middle East on fuel prices, inflation, employment and remittances.

Castro also pointed to a temporary slowdown in public construction. Government-led efforts to control spending following a controversy surrounding flood control budgets resulted in delays to some construction activity, weighing further on economic growth.

Government Expects Recovery

Despite the disappointing GDP figure, the government maintains that the slowdown will be short-lived.

Castro said authorities are working to accelerate government spending and speed up the release of approved budgets. The administration expects these measures to support economic activity as the country moves into the second half of 2026.

The government is also prioritizing infrastructure projects and price stability while seeking to expand exports and take advantage of growth in artificial intelligence and the digital economy.

However, consumer confidence remains weak, although officials said there are signs of improving business sentiment.

Economic Pressure Hits Gaming Sector

The broader economic slowdown has also coincided with weaker consumer spending and a decline in the Philippine gaming market.

The Philippine Amusement and Gaming Corporation (PAGCOR) reported a 26.6% year-on-year decline in revenue for the first half of 2026, with revenue reaching PHP43.3 billion, equivalent to around US$705 million.

The online gaming segment experienced the sharpest contraction. Revenue from eGames, eBingo and bingo grantees fell 41.9% year-on-year to PHP18.6 billion or approximately US$303 million.

By comparison, revenue from licensed casinos declined by 3.9%, while PAGCOR-operated casinos recorded an 8.7% decrease.

The sharper decline in online gaming highlights the pressure facing entertainment spending as households remain cautious amid broader economic uncertainty.

Spending and Investment Remain Key

The latest GDP figures increase pressure on policymakers to deliver the recovery expected during the second half of the year.

The government is relying on faster budget execution, infrastructure spending and support for emerging industries to strengthen economic activity. However, cautious household spending and investment remain challenges as the Philippines works to regain momentum.