First quarter predictions/expectations

At this time, most businesses or organizations already have their annual plans, budgets and strategies for 2026. Annual budgets aligned with their five-year plans, are usually prepared in September, are fine-tuned in December for final presentation in the January board meeting, together with the operating and financial results of the previous year.

The assumptions and inputs in the planning/budgetary process are heavy on the performance and events of the previous year, the trend line of prior years, forecasts of reputable think tanks/research organizations, major political/economic events, and recently on climactic/environmental occurrences. All these assumptions are probability assigned, including “black swan” or highly unlikely events.

As of December 2025, the consensus among social scientists, economic forecasters, political analysts, and news aggregators is that 2025 was not a very good year for many countries and the world, economically, socially, and politically. The continuing wars in Ukraine, in Gaza, in Sudan, and in Thailand/Cambodia, have killed thousands of people and destroyed vital/useful infrastructures reducing human and capital assets/resources.

In 2025, the growth of the economies of many countries and the world GDP growth have slowed down to the low single digits, impacting the socio-economic well-being of the people. The U.S./Trump tariffs and immigration policies and other isolationist programs, destabilized/disconnected the international trade and investment flows and linkages. These halted or slowed down the globalization of economies, politics, and societies.

With this dismal global scenario and happenings as backdrop, the Philippines economic, social and political developments unfolded, compounded by its own internal problems, both natural and man-made. Typhoons, earthquakes, floods, and volcanic eruptions were particularly severe in 2025. These calamities may have reduced the country’s GDP growth by 1% and destroyed needed capital assets. Still, the Philippine economy grew by 5% for the full year 2025 from 2024. The touted Filipino resilience, and the OFW and BPO components of the economy propelled the 70% consumption expenditure component of the GDP. The producers/manufacturing index was at 51% in December, and the retailers reported very strong Christmas sales volume. Filipinos are the best Christmas shoppers in the world.

The political DPWH corruption scandal that may have siphoned ?1 trillion from the government budget over an eight-year period, could have offset the economic losses from the natural calamities. The kickbacks/payoffs to the politicians/government officials would have gone to the working classes, translate to additional purchasing power and additional consumption expenditures in the economy. The distrust and loss of confidence of the Filipinos in politicians and political institutions have crucial and longer-term consequences. This will reduce the investment and government component of the GDP, which are the needed kickstarters for a developing economy. Consumption is not sustainable without private and government investments in basic/necessary infrastructures and job-creating industries.

In the first quarter of 2025, the Philippine economy will likely grow at an annualized rate of 4%, given the existing global and domestic headwinds. There is little that the country can do to influence the international scenario, but it can create a rapturing event in the domestic milieu to increase investments, government expenditures and private consumption. And this is to resolve the DPWH corruption scandal to the satisfaction of the Filipino people. The credible investigation and conviction of the politicians involved, including the imprisonment of some senators and congressman, will really do wonders for the Philippine economy. This would make the Philippines an upper middle income country like Turkey and Brazil by the end of 2026.