Corruption scandals weighed the economy down in the second half of 2025, but the deeper problem lies in a growth model that has been breaking since 2017, research group IBON said as the Philippine Statistics Authority (PSA) released the full-year national accounts.
Fourth quarter growth in gross domestic product (GDP) of 3% caused full year growth for 2025 to fall to 4.4%. This is not only slower than in 2024 but is consistent with the steady slowdown since the peak of 7.1% in 2016. Growth steadily decelerated after this to 6.9% (2017), 6.3% (2018), and 6.1% (2019). Excluding the pandemic-era collapse and rebound in 2020-2022 when growth averaged 1.3% annually, growth eased further to 5.5% (2023), 5.7% (2024) and 4.4% last year.
IBON said that temporary demand drivers that sustained expansion since the mid-2000s weakened even before the pandemic, and the nine-year slowdown is mainly because agriculture and manufacturing are neglected and cannot serve as engines of sustained growth.
IBON noted that the biggest factor in GDP slowdown is the softening of household consumption since 2017. After peak growth of 7.1% in household final consumption expenditure (HFCE) in 2016, this fell to an average annual of 5.9% in 2017-2019, a pandemic shock of 1.5% in 2020-2022, and then back to the slowdown trajectory of just 5% in 2023-2025.
HFCE growth slowed because wage employment plateaued and remittance growth decelerated. The share of wage and salary employment in GDP grew rapidly during the high growth years from 50% in 2003 to 62% in 2016. But it has plateaued to just around 63% in the slowdown period 2017-2025. Meanwhile, the share of overseas remittances in GDP declined from 8.5% in 2017 to 7.5% as of 2024.
Aggravating this, IBON said, is how negative net exports worsened and became a larger drag on output. Private investment softened too in response to weaker domestic and global demand. Growth in government spending has also decelerated, and while still large has not been sufficient to offset the slowdown.
The critical agriculture and manufacturing sectors have not functioned as sustainable engines of growth and job creation and are now even less able to do so, the group added. The latest GDP data confirm that manufacturing’s share of the economy has fallen to 17.3% which is its smallest in 76 years, and agriculture to 7.9% which is its smallest share in the country’s history.
As a result, economic growth is tending back to its historical average of 5% or lower. This will persist unless genuinely transformative structural reforms are undertaken, said IBON. These are completing agrarian reform, massive public investments to improve rural productivity, and a determined decades-long plan for Filipino industrialization.
Short-term boosts to growth will also not be possible if fiscal constraints from the increasingly regressive tax system and bias for debt service are not overcome, stressed the group. These reforms are made more urgent as the world economy fragments and many countries assert stronger national control over production, trade, and investment. These global trends make relying on an outdated export- and foreign investment-driven model even more untenable, said IBON.
