After a sharp slowdown in third-quarter growth, the Philippine economy is poised for a rebound in the fourth quarter, driven by the holiday season, the country’s chief economist said.

Speaking to reporters last Friday, Nov. 7, Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan expressed confidence that the economy will recover after the Philippine Statistics Authority (PSA) reported that GDP growth fell sharply to four percent in the third quarter, the slowest quarterly expansion in 4.5 years, mainly as government spending on public goods and services declined in the aftermath of the flood control corruption scandal.

The third-quarter figure fell short of the government’s full-year 2025 growth target range of 5.5 to 6.5 percent and was lower than the 5.5 percent recorded in the second quarter and 5.4 percent in the first quarter.

Balisacan cited several factors that could support growth moving forward, including the holiday season, lower interest rates and inflation compared to last year, improved global economic conditions relative to previous expectations, and remittances that continue to support consumption.

The DEPDev chief also drew lessons from the Aquino administration, which he said achieved sustained GDP growth of 6.3 percent despite low infrastructure spending. Balisacan led the National Economic and Development Authority (NEDA)—DEPDev’s predecessor—under the late former president Benigno Aquino III.

Balisacan explained that GDP growth is influenced not only by infrastructure but also by public confidence and expectations. “Any noises or disturbances, shocks, as we call them in economics, that shape people’s perception of the future can impact your GDP,” he said.

“It’s all about expectations and confidence,” Balisacan added.

On inflation, Balisacan expressed confidence that the government can keep prices stable during the holiday season. He noted that past inflation issues, particularly for basic commodities like food, were largely due to supply chain disruptions. “We have managed to handle that in the last several months, letting us see declines in the prices of basic commodities,” he said.

Balisacan also emphasized that while corruption is present in every government, he did not expect the recent one to be so extensive. “No government has no corruption,” he said, but added that the scale of it was nonetheless shocking.

Balisacan said the economy is expected to regain momentum, noting that the government is taking steps to recover lost ground. He added that these efforts should be reflected in the fourth-quarter performance.

“I would expect that the fourth-quarter performance will be better than the third quarter and that will enable us at least to hit the fives [five-percent GDP growth level]—I don’t know when in the fives, but definitely we would want to,” he said.

Balisacan added that reaching the upper end of the 2025 growth target range appears unlikely. He explained that achieving 6.5 percent would require the economy to expand by around 6.8 to 6.9 percent in the fourth quarter—a challenging feat given the current and lingering economic shocks.

“If we can get at least to the five [percent], that would be a very good achievement, given the shocks that were not anticipated,” he said.

(Ricardo M. Austria)