Philippines Economy Grows 0.1% Quarterly in Q3 as Agriculture Contracts 7.7%
Key Facts
The Philippines’ gross domestic product grew 0.1% quarter on quarter on a seasonally adjusted basis in the third quarter of 2026, according to preliminary accounts released by the Philippine Statistics Authority on November 9. The result offers a reading of economic activity during the period as households face accelerating prices and a sharp contraction in agriculture. Quarterly growth followed a 0.6% rise in output in the second quarter, pointing to a slower pace of expansion between the two periods. The authority had raised its estimate of annual growth in the second quarter to 2.4% from 2.3% in its revision. The published figures cover the performance of sectors and expenditure components, while the available data did not include a figure for annual growth in the third quarter.
Sector performance varied markedly, with agriculture, forestry and fishing activity contracting 7.7% quarter on quarter on a seasonally adjusted basis in the third quarter. By contrast, industry posted the fastest growth among sectors, rising 1.5%, while services increased 0.4%. The divergence put agriculture under the greatest pressure among the production components cited in the accounts, despite expansion in the other two sectors. The figures provided do not detail the reasons for the agricultural contraction during the quarter, but it coincides with a separate government warning about the potential risks of El Niño to agricultural output. The Development Budget Coordination Committee said the phenomenon in the second half of the year could reduce agricultural production and hamper economic activity.
On the expenditure side, gross capital formation rose 3.6% quarter on quarter in the third quarter, the fastest increase among the expenditure items reported by the authority. By contrast, government final consumption fell 0.1% quarter on quarter. Services exports also rose 2.8%, while goods exports declined 2.0% over the same period. The indicators show that growth in investment and services exports coincided with weakness in government consumption and goods exports, without changing the overall picture of limited quarterly growth. Households had recorded quarterly growth in final expenditure of 0.8% in the second quarter, compared with output growth of 0.6% at the time.
Price pressures intensified after headline inflation rose to 7.8% in October from 7.2% in September, according to the statistics authority, bringing its average to 5.6% from January to October 2026. Transport was the biggest contributor to the acceleration, with its annual index rising to 20.1% in October from 14.6% in September. The housing, water, electricity, gas and other fuels index also climbed to 9.3% from 8.4%. Meanwhile, core inflation, which excludes some food and energy components, increased to 5.4% from 4.8%. Food inflation, however, slowed to 6.4% in October from 6.8% in the previous month, moving in the opposite direction from the core and headline measures.
The Development Budget Coordination Committee said higher inflation over the year could constrain household consumption and investment, linking prices to risks to economic activity. The committee lowered its 2026 gross domestic product growth target range to 3.5–4.5%, while projecting annual growth of between 5.0 and 6.0% for 2027 to 2030. The warning comes as the labor market recorded an increase in unemployment in September to 5.4% from 5.3% in August, leaving the rate above the 3.8% recorded in September 2025. The statistics authority estimated the number of unemployed people in September at about 2.86 million. Labor data were released on November 6, but the cited unemployment rate measures September.
The statistics authority set January 2027 as the release date for fourth-quarter data and the 2026 annual accounts, following the release of preliminary third-quarter accounts on November 9. The forthcoming annual data will provide a broader reading of the economy’s performance over the year and allow comparison with the government’s growth range. Until then, third-quarter indicators remain defined by quarterly growth of 0.1%, with agriculture contracting and industry and services expanding. Price pressures, particularly accelerating transport, housing and utilities costs, will remain among the factors the government committee said could affect household consumption and investment. The committee also cited the possibility that El Niño could affect agricultural production and economic activity in the second half of the year.