Manila: Malaca±ang announced its expectation for the Philippine economy to regain momentum in the latter half of 2026, attributing this anticipated recovery to increased public spending and accelerated budget releases. This comes in response to the slower-than-expected GDP growth of 2.3 percent in the second quarter, described as 'only temporary' by the Palace.
According to Philippines News Agency, the recent GDP growth marks a decline from the 5.5-percent growth recorded in the same period in 2025 and is the slowest since the Covid-19 pandemic. Palace Press Officer Claire Castro stated that while the GDP figures fell short of expectations, they do not reflect the country's long-term economic prospects. The slowdown was attributed to the Middle East crisis impacting inflation, fuel prices, employment, and remittances, alongside a temporary reduction in public construction amid an intensified anti-corruption campaign.
"This slowdown is only temporary," Castro emphasized. She expressed optimism that as government spending accelerates and budget releases become more efficient, the economy is expected to rebound in the latter half of the year. Government spending has already seen an 8.3 percent increase, with a focus on aiding families most affected by rising prices.
For the second half of 2026, the government aims to boost economic growth through expedited high-impact infrastructure projects, price stabilization, and targeted assistance to vulnerable sectors. Initiatives include expanding the UPLIFT assistance program to 7.5 million families, a PHP12-per-liter fuel subsidy, and the Bawat Bayan Makikinabang Rice Program.
Efforts are also underway to expand exports and enhance competitiveness, with the Philippines positioning itself to benefit from the global AI and digital economy boom through its Pax Silica coalition membership. Key legislative measures, such as raising the personal income tax exemption threshold to PHP350,000, have been endorsed to support the middle class and stimulate domestic consumption.
Other priority measures include amending the Electric Power Industry Reform Act (EPIRA) to prevent passing system loss charges and VAT to consumers, the Sariling Kuryente Act, MCIT exemptions for small businesses, a general tax amnesty, and abolishing the travel tax.
Despite the weaker GDP performance, Castro highlighted positive economic indicators, including a 12.2 percent growth in exports driven by strong demand for electronics, semiconductors, AI-related products, and agricultural goods. Agriculture grew by 2.7 percent, with travel exports rising by 12.6 percent. Merchandise exports achieved double-digit growth for the fifth consecutive quarter, while manufacturing expanded by 2.6 percent, demonstrating sustained industrial activity despite slower construction.
"Although consumer confidence is still low, businesses are starting to improve," Castro noted, adding that manufacturing continues to thrive, supported by strong global demand for technology products and an expected recovery in infrastructure spending.
