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Philippine economy growth could improve in the third quarter of 2026, with economists projecting a 3.2% expansion as stronger electronics exports and increased government spending support economic activity. However, persistent inflation, weaker household consumption, and slower construction activity continue to pose challenges to a sustained recovery.

The forecast, shared by economists from the Bank of the Philippine Islands (BPI) and Philippine National Bank (PNB), suggests that the country’s economic performance may improve from the 2.3% growth recorded in the second quarter.

If the projection materializes, it could mark the end of four consecutive quarters of slowing economic growth. Nevertheless, the expected expansion would remain below the 4% growth recorded during the same period in 2025.

The Philippine Statistics Authority (PSA) is scheduled to release the official third-quarter gross domestic product (GDP) figures on November 9, 2026.

Economists Expect Philippine GDP Growth to Reach 3.2%

BPI Lead Economist Emilio S. Neri Jr. expects the Philippine economy to expand by 3.2% in the July-to-September period, citing stronger export performance and increased government disbursements.

Neri explained that favorable base effects also contributed to the improved outlook. The comparison with the third quarter of 2025 is more favorable because government infrastructure spending issues began affecting economic activity during that period.

Philippine National Bank economist Alvin Arogo also projected 3.2% growth for the third quarter.

Arogo pointed to the normalization of transportation spending following the initial impact of higher petroleum prices during the second quarter. He also identified the favorable comparison with last year’s public construction activity as another factor supporting the forecast.

Although both economists expect an improvement, their projections remain subject to economic conditions and the official national accounts data.

Electronics Exports Provide Support to Economic Activity

Stronger electronics exports are among the developments supporting the country’s economic outlook.

Official trade figures showed that Philippine electronics exports reached approximately $6.92 billion in September 2026, compared with $4.02 billion during the same month last year.

The increase highlights the importance of the electronics industry to the country’s export performance, particularly as international demand for artificial intelligence-related products continues to support the technology supply chain.

Electronics remain one of the Philippines’ major export categories, making the sector an important contributor to manufacturing activity and international trade.

BPI also identified firmer electricity demand and continued investments in electric vehicles and green technology as additional areas supporting economic activity.

However, stronger exports alone may not be enough to produce a broad-based recovery if domestic consumption and investment remain weak.

Government Spending Shows Mixed Results

Government expenditures have also contributed to the expected economic improvement.

National government disbursements reached approximately ₱4.27 trillion from January to August 2026, representing an 8% increase from the ₱3.95 trillion recorded during the same period in 2025.

Higher government spending can support economic activity through public services, infrastructure projects, and other government-funded programs.

However, infrastructure spending remains an area of concern.

Government capital outlays declined to approximately ₱522 billion at the end of September, compared with ₱798.4 billion during the same period last year.

The decline indicates that infrastructure-related expenditures have yet to demonstrate a stronger recovery, despite the increase in overall government disbursements.

BPI noted that private construction activity also weakened during the third quarter, while public infrastructure spending remained in contraction.

Rising Inflation Continues to Pressure Filipino Households

Despite the improved economic growth forecast, higher consumer prices remain a major concern for Filipino families.

The Philippine Statistics Authority reported on November 5 that headline inflation accelerated to 7.8% in October 2026, up from 7.2% in September. This was significantly higher than the 1.7% recorded in October 2025.

Transportation recorded a 20.1% annual price increase, while housing, water, electricity, gas, and other fuels registered inflation of 9.3%.

Food and non-alcoholic beverage inflation, meanwhile, slowed to 6.1% from 6.7% in September. However, rice prices continued to increase, with rice inflation reaching 20.7% in October.

These developments could affect household purchasing power and limit spending on non-essential goods and services.

For businesses, higher transportation and operating costs could also influence investment decisions, production expenses, and consumer demand.

Economic Recovery Remains Uneven

While stronger exports and government expenditures provide reasons for optimism, economists continue to identify several risks to the country’s recovery.

BPI warned that household demand remains subdued, with vehicle sales and consumer goods imports indicating that consumers are still cautious about discretionary spending.

The construction industry also faces challenges, while weather-related disruptions could affect agricultural production, transportation, and other economic activities.

Not all economic analysts share the same outlook. Economists from the University of Asia and the Pacific previously projected third-quarter growth of around 2%, citing persistent oil prices and slower government spending.

The difference between the projections highlights the uncertainty surrounding the country’s economic performance.

PSA to Release Official Third-Quarter GDP Figures on November 9

The upcoming release of the third-quarter national accounts will provide a clearer picture of whether the Philippine economy managed to accelerate between July and September.

The Philippine Statistics Authority has scheduled its announcement for November 9, 2026, at 10:00 a.m.

The official figures will help determine whether the 3.2% projections from BPI and PNB were achieved and provide additional information about the performance of major economic sectors.

For now, stronger electronics exports and government disbursements offer some positive signs for the Philippine economy. However, persistent inflation, cautious household spending, and weak infrastructure activity remain important challenges.

Even if economic growth improves in the third quarter, translating that expansion into better purchasing power, stronger employment opportunities, and more affordable living costs will remain essential to making the recovery meaningful for ordinary Filipinos.