Philippines says Mideast war sends economic growth to five-year low

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Manila: The Philippine economy experienced a notable deceleration in the first quarter of 2026, with growth reaching a five-year low. According to the Philippine Statistics 

Authority, gross domestic product (GDP) expanded by 2.8 percent during this period, a significant drop from the 5.4 percent growth recorded in the first quarter of the previous year. This performance marks the lowest growth rate since the beginning of 2021, excluding the years impacted by the pandemic.

Economic Planning Secretary Arsenio Balisacan identified several internal and external factors contributing to this trend. Externally, the ongoing conflict in the Middle East has introduced elevated global uncertainty. 

Domestically, the economy was hampered by a multi-billion dollar corruption scandal involving fraudulent state-funded flood control projects, which led to widespread protests and arrests. Additionally, delays in approving the national budget stalled major infrastructure projects, while consumer price inflation rose to a three-year high of 7.2 percent.

In response to these challenges, the government has signaled that it will revise its economic growth targets downward. While the 2026 GDP target had already been adjusted to 5-6 percent in December, economic managers are scheduled to meet next week to conduct a further review. 

Secretary Balisacan emphasized that addressing corruption transparently is essential to restoring the confidence of investors and consumers alike as the nation navigates these economic headwinds.