Industrial output shrank between April and June this year, a setback that helped pull down overall Philippine economic performance and left second-quarter growth at 2.3 percent, according to figures the Philippine Statistics Authority disclosed Friday.
That result marks a steep drop from the year-earlier pace and trails the first quarter as well. The government’s own economic managers pointed to conditions abroad as a major drag. “Household consumption growth also moderated amid higher inflation, job losses, and lower remittance receipts arising from the Middle East conflict,” Department of Economy, Planning, and Development Secretary Arsenio Balisacan told reporters at a Friday briefing, according to BusinessWorld.
The 2.3-percent reading undershot market expectations. Reuters reported that analysts it surveyed had penciled in growth of 2.8 percent, a figure that would have kept pace with the opening quarter of the year.
Not every sector moved in the same direction. Services carried much of the load, growing 4.5 percent, and farm-related activity — spanning agriculture, forestry and fishing — added 2.7 percent. Industry told a different story, sliding 2.4 percent over the three-month stretch. According to Rappler, this was the slowest quarterly expansion the country has recorded since the final quarter of 2009.
Government outlays offered a counterweight to softer private demand. “However, government final consumption spending accelerated as social assistance was expanded to cushion vulnerable households and sectors,” Balisacan said. BusinessWorld reported that state spending climbed 8.3 percent while household consumption managed only 2.8 percent, and that investment, measured as gross capital formation, dropped 9.2 percent.
Trade figures gave officials something to point to. “Stronger semiconductor exports, supported by global demand for AI-related products, helped net exports rebound during this semester or the quarter,” Balisacan said. Rappler reported that goods exports jumped 17 percent, with shipments of consumer electronics soaring 230.3 percent from a year earlier and semiconductor components up 13.4 percent — a surge the secretary tied to worldwide appetite for artificial intelligence hardware.
Balisacan also linked the industrial weakness to fallout from the previous year’s flood control scandals. Rappler reported his assessment that public construction dragged on the numbers because officials had grown wary of signing off on projects amid intensified scrutiny, and that growth might have been at least a full percentage point higher had that spending merely held flat.
The disappointing quarter has already reshaped the government’s expectations for the year. Reuters noted that authorities lowered the 2026 growth goal to a range of 3.5 to 4.5 percent back in June, citing both the Middle East crisis and the corruption controversy that stalled state disbursements.
