A manufacturing group has warned that the Philippine economy runs the risk of overdependence on growth from the services sector, which cannot fully absorb employment demand or provide a production base for global competitiveness, as it urged the urgent revitalization of the industrial sector.
The Federation of Philippine Industries (FPI) issued the statement following the dismal fourth-quarter GDP results last year and lower overall GDP growth for 2025. The Philippine Statistics Authority (PSA) reported that the economy grew by 4.4 percent in 2025, missing the government’s 5.5 to 6.5 percent target for the third consecutive year.
Growth was driven largely by the services sector, which expanded by 5.9 percent, led by wholesale and retail trade (5.2 percent) and financial and insurance activities (5.8 percent). Agriculture, forestry, and fishing (AFF) posted modest growth of 3.1 percent, showing recovery despite climate disruptions.
However, the industry sector grew by only 1.5 percent for the year and contracted by 0.9 percent in the fourth quarter due to persistent headwinds in construction, mining, and utilities.
“Without a strong industrial backbone, the economy risks overdependence on services, which cannot fully absorb employment demand or provide the production base for global competitiveness. Revitalizing Industry means making our factories, construction sites, and energy systems resilient to shocks and capable of delivering inclusive growth nationwide,” said Elizabeth H. Lee, FPI chairperson.
The fourth-quarter contraction in industry, despite modest manufacturing gains of 2.5 percent growth, revealed structural weaknesses in construction, mining, and utilities. Lee explained that these subsectors are critical for job creation, infrastructure development, and energy stability—pillars that sustain long-term growth. The figures underscore the urgent need to strengthen the country’s industrial base to secure resilience and competitiveness.
The slowdown in infrastructure rollout, high energy costs, and supply chain disruptions weighed heavily on the industry’s overall performance, while external shocks such as typhoons and global trade uncertainties compounded structural weaknesses.
“The numbers show a stark truth. Services alone cannot carry the Philippine economy. Industry must be revitalized to ensure resilience, competitiveness, and inclusive growth,” said Lee.
Lee said FPI, which groups the country’s manufacturing firms, has called for urgent action to accelerate infrastructure programs, strengthen manufacturing competitiveness through innovation and export diversification, enhance energy resilience through stable and affordable power, and institutionalize industrial policy reforms while aligning with ASEAN.
“The Federation stands ready to work with government and partners to rebuild and fortify the country’s industrial base as the Philippines hosts ASEAN 2026,” Lee said.
