A major business group is pushing for more reforms to lift economic growth after the gross domestic product missed the government’s target and grew by only 4.4 percent in 2025.
GDP grew by 3.0 percent in the fourth quarter of 2025, slower than the 5.3 percent growth recorded in the same quarter of 2024, according to the Philippine Statistics Authority (PSA).
This brought full-year growth to 4.4 percent, down from 5.7 percent in 2024 and below the government’s growth target of 5.5 percent to 6.5 percent for 2025.
It was the slowest full-year post- pandemic expansion for the Philippine economy. Outside of the pandemic, the fourth quarter was the slowest growth since the third quarter of 2011, when the Aquino administration suspended several infrastructure projects over corruption concerns.
Makati Business Club (MBC) executive-director Apa Ongpin said while significant areas of the Philippine economy have been liberalized in the last ten years, and fiscal incentives have been rationalized and expanded, “these economic reforms need to be complemented by reforms in transparency, governance and ease of doing business.”
“MBC believes that key legislation, like the Freedom of Information bill, amendments to the Bank Secrecy law and institutionalizing a budget process more open to public scrutiny, are important to economic development. The government should also make sure that EODB practices are well implemented while the LGU-level and agency-level digitalization initiatives [such as one window portals] are ramped up,” the business group said in a statement.
“If anti-corruption measures and other related priority reforms that further level up governance standards would be taken seriously, these would be the missing and remaining important catalyst that would help improve investor confidence/sentiment,” said Rizal Commercial Banking Corp. (RCBC) chief economist Micheal Ricafort.
“These anti-corruption measures in turn, would also lead to more investments, both foreign and local, create more jobs/employment and other business/economic activities, as well as support further gains in the local financial markets,” he said.
SM Investments Corp. economist Robert Dan Roces said the slower-than-expected growth reflected a confidence crisis, more than an execution problem.
“Government spending was strong and exports surged, but couldn’t offset the investment spiral that’s now in its fourth consecutive quarter of decline. Services held while industry contracted, revealing growth remains consumption-dependent, propped by remittances rather than productive investment,” said Roces.
Roces said while the Bangko Sentral ng Pilipinas (BSP) has space to ease monetary policy with inflation at 1.7 percent, rate cuts alone would not revive business confidence.
“2026 hinges on structural reforms to reverse the capex collapse, as trade strength and fiscal support can’t compensate for an investment freeze that threatens medium-term potential,” said Roces.
Department of Economy, Planning and Development (DEPDev) Secretary Arsenio Balisacan said 2026 should serve as a rally point.
“We are accelerating efforts to restore public trust through improvements in governance and public services . . . In infrastructure, we are accelerating the completion of public works while enforcing stricter anti-corruption safeguards. At the same time, we are pursuing long-term and high-impact reforms in infrastructure development planning, guided by comprehensive science and technology-based master plans,” said Balisacan.
The fourth-quarter growth of 3.0 percent was the weakest quarterly expansion in five years. The Philippine Statistics Authority (PSA) said the industrial sector contracted by 0.9 percent during the period, while gross capital formation, a measure of investment, tumbled 10.9 percent.
Wholesale and retail trade, financial activities and public administration remained the primary drivers of growth during the October to December period.
Public administration and defense led the gains with a 7.9 percent increase, followed by financial and insurance activities at 5.6 percent and trade at 4.6 percent.
For the full year, the services sector led the economy with a 5.9-percent expansion, while agriculture, forestry and fishing grew 3.1 percent. The industrial sector recorded a modest 1.5 percent increase for all of 2025.
Consumer spending, which traditionally anchors the Philippine economy, rose 3.8 percent in the fourth quarter and 4.6 percent for the full year. Government spending saw a significant annual jump of 9.1 percent despite the year-end cooling.
External trade provided a silver lining as exports of goods and services surged 13.2 percent in the fourth quarter. Imports grew at a slower pace of 3.5 percent during the same period.
The gross national income, which includes earnings from Filipinos working overseas, grew 6.1 percent for the full year. This was bolstered by net primary income from the rest of the world, which jumped 19.1 percent in 2025.
