MANILA, Philippines – The Philippine economy grew at a much slower pace in the first quarter of 2026 as price shocks brought by the Middle East conflict dampened household spending and the flood control corruption scandal continued to weigh on consumer sentiment and business confidence.

The Philippine Statistics Authority said on Thursday, May 7, that the country’s gross domestic product (GDP) grew by only 2.8% in the first quarter of 2026, considerably lower than the 5.4% growth logged in the same period in 2025.

The latest figure fell short of the government’s target range of 5% to 6%, which was already lowered from the original range of 6% to 7% due to the economic slowdown triggered by the flood control corruption scandal.

It was also below analysts’ expectations of 3.4%.

Household consumption was expected to slow as the situation in the Middle East pushed fuel and food prices higher, causing inflation to accelerate at its fastest pace since the 1990s.

The Bangko Sentral ng Pilipinas resumed interest rate hikes in April after its inflation outlook deteriorated due to the Middle East crisis. Central banks raise interest rates to temper high inflation, as such hikes curb excessive borrowing and spending.

The monetary authority now sees inflation averaging at 6.3% in 2026. – Rappler.com