[In This Economy] The Philippines has entered stagflation territory

Résumé détaillé

There’s a lot of lost growth to catch up on, especially since many if not most of our neighbors are performing well in terms of growth ...

The Philippine economy grew by a measly 2.1% in the third quarter of 2026, the Philippine Statistics Authority (PSA) reported on Monday, November 9. That’s down from 4% in the same quarter last year and 2.4% in the second quarter, after revisions.

This is a deeply disappointing result. Growth fell 0.9 percentage point short of the 2.7% median forecast in a BusinessWorld poll of economists. And we’ve now had two quarters of unusually weak growth alongside high inflation. By my own calculations, we’ve entered stagflation territory.

How much did the economy grow from the second to the third quarter itself? Once you account for the usual seasonal ups and downs, gross domestic product (GDP) grew by just 0.1%. In other words, the amount of goods and services we produced barely changed from one quarter to the next.

That leaves growth at about 2.5% for the first nine months of 2026. To reach even the bottom of the government’s reduced target of 3.5% to 4.5% for 2026, the economy would have to grow by 6.3% in the last quarter. Where would that growth come from? Your guess is as good as mine.

Let’s start with household spending, which accounts for nearly three-fourths of the economy. It grew by just 2.4% from a year ago, after adjusting for inflation. Spending on food and nonalcoholic drinks grew by only 1.6%. Spending on transport fell by 5.3%, its second straight quarterly decline from a year earlier.

One reason for weaker spending is very high inflation, which reached 7.8% in October, up from 7.2% in September. October falls outside the GDP report, which covers July to September, but it gives us an early indication of the squeeze on households going into the final quarter.

Meanwhile, agriculture, forestry, and fishing contracted by 4.8%, and industry was essentially flat. Services grew by 3.7% and contributed about 2.5 percentage points to overall growth. That’s more than the economy’s 2.1% growth because losses elsewhere ate into those gains.

The PSA reported that total…

What…

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