Philippines risks slowdown this year as election spending effect wanes

THE PHILIPPINES risks losing economic momentum in 2026 unless reforms are carried out to extend the lift from election-related spending last year, according to a state think tank.

- By Aubrey Rose A. Inosante and Katherine K. Chan Reporters

Growth last year has been partly driven by higher household consumption and public outlays tied to the elections, but that boost may fade once the political cycle ends, said John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies (PIDS).

Without structural reforms, the economy could slow as temporary spending support unwinds, he told a webinar on Thursday.

"But for 2026, we might face post-election risks. Without reforms, momentum will fade, and sustainability depends on reforms, not on political cycles," Mr. Rivera said.

The state think tank expects Philippine gross domestic product (GDP) to expand by 5.3% in 2026, within the government's revised 5-6% growth target.

It also noted that Philippine GDP growth likely averaged 5% in 2025, below the government's 5.5-6.5% target and slower than the actual 5.7% growth in 2024.

Mr. Rivera noted election years stimulate growth, but its effects are temporary and cyclical. For instance, infrastructure spending was frontloaded in early 2025 ahead of an election ban on public works.

"While fiscal expansions, such as those that we are seeing always during election periods, can temporarily stimulate the economy, and generate economic activities, they are not substitutes for structural reforms," he said.

Mr. Rivera said good governance, transparency and accountability are needed to ensure the temporary boost from elections are converted into "durable, real and long-term gains."

For this year, Mr. Rivera said the key headwinds or risks include a global economic slowdown and rising protectionism among developed economies.