The impact of government measures to support domestic economic growth is expected to begin materializing in the second quarter of 2026, Department of Economy, Planning and Development (DEPDev) Secretary Arsenio Balisacan said Thursday.

The statement followed the Philippine economy’s 3 percent growth in the fourth quarter of 2025, slower than 3.9 percent in the previous quarter and 5.3 percent a year earlier, based on Philippine Statistics Authority (PSA) data. Full-year growth settled at 4.4 percent, below the 5.7 percent in 2024 and under the revised 4.8 to 5 percent target.

On the demand side, fourth-quarter exports of goods rose 22.8 percent, household consumption grew by 3.8 percent, imports of services increased by 4.2 percent, and government spending expanded by 9.1 percent.

For the full year, exports of goods grew by 14.1 percent, government consumption by 9.1 percent, imports of services by 6.1 percent, and imports of goods by 4.7 percent.

The government targets GDP growth of 5 to 6 percent this year and 5.5 to 6.5 percent in 2027, with export growth targets of 2 percent and 3 percent, respectively. The foreign exchange assumption for both years is PHP58.60 to a US dollar.

In a briefing, Balisacan said a return to at least 5 percent growth is possible by the second quarter, noting that meeting the annual target would require growth to reach that level by then.

"That's the goal anyway, to go to the five to six percent for the entire year. On exactly what month or quarter, it’s something definitely I couldn’t say but, yes, to be able to go to 5 to 6 percent, you have to grow 5 percent by Q2 (second quarter)," he said.

He attributed the slowdown to weather- and climate-related disruptions, anomalous flood control projects, and global uncertainties that dampened construction and private consumption. Domestic demand growth slowed to 0.7 percent in the fourth quarter, while full-year expansion reached 3.7 percent.

Balisacan stressed the need to restore investor and consumer confidence through governance reforms, stronger accountability, improved project quality, and better use of public funds. He also cited improving disaster preparedness, early warning systems, and state weather bureau capacity.

For infrastructure, he said the government will accelerate ongoing projects while strengthening anti-corruption safeguards to support recovery and sustainable growth.

"These reforms protect public funds, strengthen our institutions, build a more resilient, inclusive economy, and ultimately, rebuild trust between government and the people we serve," Balisacan said.