Philippine Economy Slows to 2.3% in Q2 Amid Peak Middle East War Impact

MANILA, Philippines —The Philippine economy grew at its slowest pace in the second quarter of 2026, expanding 2.3 percent as the Middle East war’s fallout dampened economic activity, the Philippine Statistics Authority (PSA) reported on Friday. The latest print was slower than the 2.8 percent recorded in the first quarter and the 5.4 percent posted a year ago, again marking the country’s weakest economic performance in 16 years outside the pandemic period. READ: Poll: Q2 PH growth likely slowed to 2.7% With this, first semester growth averaged at 2.6 percent, putting the Marcos administration further off track from its already downgraded 3.5-percent to 4.5-percent target. The figure also came below the 2.7-percent median estimate of 14 economists polled by the Inquirer. As it is, the Philippine economy has yet to recover from its prolonged slowdown since growth first decelerated in the third quarter of 2025, when the flood control corruption scandal erupted. This time, war-driven inflation eroded household consumption—one of the country’s biggest drivers of economic growth. Consumer prices peaked at a three-year high of 7.2 percent in April and, although inflation eased in May and June, remained among the highest in recent years and well above the government’s 3-percent target. READ: Inflation slows to 6.2% in July State statisticians said household consumption growth slowed to 2.8 percent during the quarter from 5.2 percent last year, while government spending slumped to 8.3 percent from 8.7 percent, and infrastructure disbursements contracted by 9.2 percent from a 0.9-percent growth. /pai