Abstract

Under the growth-relative definition used in this note, stagflation most likely occurred in the Philippines in the third quarter of 2026. Headline inflation averaged 6.50 percent, and real output growth of 2.14 percent was 0.13 percentage point below the baseline cutoff. The second quarter barely met the same test, with growth only 0.009 percentage point below the cutoff. Both quarters still qualify when pandemic years are left out of the growth average. Neither quarter qualifies under a fixed growth cutoff below 2 percent or an inflation threshold above 8 percent. The policy response depends on whether inflation persists, activity weakens further, and rising prices continue to erode purchasing power.

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