Philippines Posts Slowest Quarterly GDP Growth Since Pandemic In 2Q26

The Philippines recorded its slowest quarterly growth since the pandemic in the second quarter of 2026, with GDP rising by just 2.3% year-on-year. The government said the weak performance is only temporary and expects the economy to pick up in the second half of the year as spending accelerates.

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Growth Misses Expectations

The latest figure follows 5.5% growth in 2Q25. Malacañang Palace Press Officer Claire Castro said the shortfall did not meet government expectations. She attributed the slowdown to the effects of the Middle East conflict on fuel costs, inflation, employment, and remittances.

Castro also cited a temporary delay in public construction linked to a government-led anti-corruption campaign aimed at controlling costs following the scandal over flood control budget use. Those factors, she said, weighed on overall economic activity during the quarter.

According to the nation’s official news agency, Castro said the slowdown is only temporary. She added that as the government continues to speed up spending and release budgets more quickly, it hopes the economy can start to pick up in the second half of the year as well.

Impact On Consumer Spending And Gaming

While the government’s comments focused on public expenditure, the same factors have also affected disposable income and consumers’ willingness to spend on entertainment. That has been reflected in recent data from the gaming sector, where regulators have reported a sharp decline in revenue.

Gaming regulator PAGCOR last week reported a significant 26.6% drop in revenue for 1H26, reaching just Php43.3 billion, or US$705 million. The downturn was marked by significant weakness in the online segment.

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Online gaming revenue, from eGames, eBingo, and bingo grantees, fell 41.9% year-on-year to Php18.6 billion, or US$303 million. That decline was much steeper than the 3.9% yearly drop in PAGCOR revenues from licensed casinos and the 8.7% fall in revenue from PAGCOR-operated casinos.

Government Remains Optimistic

Despite the weak second-quarter reading, the presidential palace remains confident in the prospects for the rest of the year. The government said it is fast-tracking key infrastructure projects and focusing on price stability, while also expanding exports and looking to benefit from the AI and digital economy boom.

Castro said that although consumer confidence is still low, businesses are starting to improve. The government’s view is that the combination of faster budget execution, infrastructure spending, and support for emerging sectors should help lift growth in the coming quarters.

The latest GDP data places pressure on policymakers to deliver on that promise, especially as household spending and investment remain cautious.

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Source: Inside Asian Gaming