[In This Economy] The Philippines has entered stagflation territory

The Philippine economy grew by a measly 2.1% in the third quarter of 2026, the Philippine Statistics Authority (PSA) reported on Monday, November 9. That’s down from 4% in the same quarter last year and 2.4% in the second quarter, after revisions.

This is a deeply disappointing result. Growth fell 0.9 percentage point short of the 2.7% median forecast in a BusinessWorld poll of economists. And we’ve now had two quarters of unusually weak growth alongside high inflation. By my own calculations, we’ve entered stagflation territory.

How much did the economy grow from the second to the third quarter itself? Once you account for the usual seasonal ups and downs, gross domestic product (GDP) grew by just 0.1%. In other words, the amount of goods and services we produced barely changed from one quarter to the next.

That leaves growth at about 2.5% for the first nine months of 2026. To reach even the bottom of the government’s reduced target of 3.5% to 4.5% for 2026, the economy would have to grow by 6.3% in the last quarter. Where would that growth come from? Your guess is as good as mine.

Households are feeling it

Let’s start with household spending, which accounts for nearly three-fourths of the economy. It grew by just 2.4% from a year ago, after adjusting for…