THE PHILIPPINE economy’s lower-than-expected growth last year may persist into 2026 if climate-related disruptions and government corruption persist, an economist has warned.
UST Economics instructor Justin Nikko Lazo said last year’s growth – the slowest in 14 years excluding the pandemic period – was caused by deeper constraints that outweighed supportive economic policies.
“Without meaningful reforms and a credible resolution to governance issues, the headwinds that defined last year are likely to persist into 2026,” Lazo said at a forum hosted by the Department of Economics on Monday, Feb. 9.
Lazo said the recent government corruption scandals had weighed heavily on growth, particularly the slowdown in public infrastructure spending due to widespread project deferments.
“Although the hold in infrastructure spending has been viewed by some as [a] prudent decision…it also emphasized the need for policymakers who strive for a careful balance between discernment and inaction as they navigate future challenges,” he said.
The Philippine Statistics Authority reported that the country’s gross domestic product (GDP) grew by 4.4% in 2025, the weakest expansion in more than a decade, excluding 2020’s recession, and the slowest since the recovery began.
The figure is the lowest recorded since 2011, when GDP growth stood at 3.7%. Post-pandemic, the economy posted its highest growth in 2022 at 7.6% before easing to 5.5% in 2023 and 5.7% in 2024.
The full-year expansion was also lower than the government’s 5.5% to 6.5% target and marked the third consecutive year the Philippines missed its growth goal.
Lazo said the stalled construction works may have weakened confidence among contractors and suppliers.
Weather disturbances, he added, also hampered economic growth, particularly in agriculture and logistics, sectors highly exposed to typhoons and other extreme events.
“These disruptions did not necessarily increase in frequency, but their economic impact has become more pronounced,” the economics instructor said.
“Climate shocks occur frequently enough to affect trend growth, not just short-term volatility…They are immediate and economically material.”
The Philippines, which is visited by about 20 cyclones every year, remains the most disaster-prone country, according to the World Risk Index 2025.
With climate risks and governance challenges unresolved, Lazo warned that the same forces that pulled growth down in 2025 could continue to weigh on the economy this year.
“The broader lesson from 2025 is that unresolved structural and governance issues can significantly blunt the effectiveness of otherwise supportive macroeconomic policies,” he added.
The Tiger Outlook forum, organized by the UST Artlets Economics Society, was held at the Central Laboratory building auditorium as part of the AB Week celebrations. F — with reports from Mei Lin Weng
