The Philippine economy ended 2025 on a weaker footing than expected, with growth slowing sharply in the final quarter and exposing structural and confidence-related vulnerabilities that now shape the outlook for 2026.

Gross domestic product grew by just 3.0 percent in the fourth quarter, significantly below the 5.3 percent recorded in the same period a year earlier. This dragged full-year growth to 4.4 percent, missing both market expectations and the government’s official target. While weather-related disruptions from successive strong typhoons played a major role, BDO noted that the slowdown was compounded by delays in government spending and infrastructure execution.

Investigations into flood control projects slowed disbursements and investment flows during what is typically a high-spending period. The result was a drag on consumption, construction, and broader economic momentum. Beyond the numbers, the episode reinforced concerns about governance bottlenecks and their real economic cost.

The government has since emphasized reforms aimed at restoring public trust and accelerating stalled projects. However, with growth now running well below pre-pandemic averages, the challenge for 2026 will be translating intent into execution quickly enough to prevent the slowdown from becoming entrenched