---
title: "Philippine growth unexpectedly slows as inflation risks rise"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/285476287.md"
description: "Philippine economic growth unexpectedly slowed to 2.8% in Q1, below the 3.3% forecast, amid rising inflation and investment decline. Consumer spending rose 3%, while government spending increased by 4.8%. The economy is impacted by high energy costs from the Middle East conflict and a corruption scandal affecting public investment. The central bank faces challenges in supporting the economy due to peso weakness and surging prices. The growth rate lags behind regional neighbors like Indonesia and Vietnam, with inflation soaring past 7%."
datetime: "2026-05-07T03:05:19.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/285476287.md)
  - [en](https://longbridge.com/en/news/285476287.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/285476287.md)
---

# Philippine growth unexpectedly slows as inflation risks rise

\[MANILA\] Philippine growth unexpectedly slowed in the first quarter, making the country a laggard within the region and challenging policymakers trying to cool inflation and support the peso.

Gross domestic product rose 2.8 per cent in the January-to-March period from a year earlier, the Philippine Statistics Authority said on Thursday (May 7). That’s lower than the 3.3 per cent median forecast in a Bloomberg News survey and below the 3 per cent pace of the previous quarter.

Investment fell 3.3 per cent in the quarter, and industrial production edged down 0.1 per cent. Consumer spending rose 3 per cent from a year earlier, while government spending gained 4.8 per cent.

There was no immediate reaction in Philippine stocks, which were trading about 2 per cent higher amid a regional rally.

The disappointing data underscores the damage caused by rising energy costs due to the Middle East conflict, with the economy already struggling after a corruption scandal led to a drastic slowdown in public investment and private consumption. The central bank, which last month raised interest rates, has little room to support the economy because of peso weakness and surging consumer prices.

The US conflict with Iran has spiked oil prices globally, but the Philippines is particularly affected because it imports nearly all of its oil requirements from the Middle East. The quarterly growth reading lagged that of neighbours such as Indonesia, Malaysia and Vietnam.

SEE ALSO

### Philippines may need larger rate hike as inflation soars past 7%

### Philippine central bank sees inflation rising to three-year high

### Philippine central bank hikes rate as war sends inflation past target

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Before the war erupted, the Philippines had already been rocked by revelations that billions of US dollars in public funds meant for flood-control projects had been misused. That led 2025 growth to slump to 4.4 per cent, the weakest pace in more than a decade outside the pandemic. BLOOMBERG

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