The Philippine economy is expected to sustain steady growth through 2026, supported by resilient domestic demand, infrastructure spending, and continued expansion of the services sector, according to a study by the Philippine Institute for Development Studies (PIDS).
The state think tank projects economic growth of 5% in 2025 and 5.3% in 2026, following a 5.7% expansion in 2024, pointing to continued recovery despite global and domestic headwinds.
Speaking at a January 15 webinar, lead author John Paolo Rivera said inflation has eased and economic stability has returned, but reforms are needed to make growth more durable.
“We are growing and inflation is under control,” Rivera said. “The challenge is making growth more robust and secure.”
Growth eased slightly to 5.4% in the first half of 2025 amid softer investment activity, climate-related disruptions, and global trade uncertainty.
The services sector remains the main growth driver, led by trade, finance, tourism, construction-related services, and the BPO industry, supporting jobs and household consumption. However, agriculture continues to lag due to climate shocks and structural weaknesses.
While consumption continues to support near-term growth, the study stressed the need to accelerate public and private investment, particularly in infrastructure, to raise long-term productivity.
Service exports remain strong, though easing, while merchandise exports face risks from global slowdown and trade policy uncertainty. The labor market remains stable, but improving job quality and productivity remains a key challenge.
Looking ahead, the PIDS report, co-authored by Ramona Maria Miral and Mark Gerald Ruiz, said easing inflation and resilient domestic demand should support moderate growth through 2026, though stronger governance and investment execution will be critical to achieving inclusive and sustained expansion.