Recent macroeconomic data indicate that the growth rate of the Philippine economy is decreasing. The gross domestic product (GDP) growth rate has posed notable declines in three consecutive quarters; 3.9% in Q3 2025, 3.0% in Q4 2025, and 2.8 % in Q1 2026. These declines coincided with significant increases in the inflation rate and sustained increases in the unemployment rate. These, in turn, are symptomatic of a stagflation episode.
This study provides a careful evaluation of relevant macroeconomic data and an assessment of the hypothesis that the Philippines is experiencing stagflation. Upon considering previous episodes of stagflation, examining the mechanics of the phenomenon, and inspecting the most recent macroeconomic datapoints, it can be argued that the Philippines is indeed in a stagflation episode.
The paper concludes with a discussion of the limitations of expansionary fiscal policy and accommodative monetary policy within the prevailing context; as well as the recommended macroeconomic policy positions moving forward.