Gross domestic product (GDP) expanded 2.1% in the three months to September from a year earlier, the statistics agency said Monday. That compares to 2.4% growth in the second quarter, and a median estimate of 3.1% in a Bloomberg News survey.

The peso fell 0.3% and the benchmark Philippine stock index dropped 0.6% after the data release. 

While government spending rose, agricultural output fell 4.8%, while industrial production was essentially unchanged from a year earlier. Farm output was hurt as typhoons battered the climate-vulnerable nation.

The data underscore the damage to the Philippines from the US-Iran war, which has driven up crude oil prices and inflation, forcing the central bank to hike interest rates. The resulting higher cost of living and still-unresolved government corruption scandals have weakened consumer and business confidence. Such headwinds are expected to weigh on the Southeast Asian nation’s economic prospects through the rest of the year.

Growth started to slow in the third quarter of last year. At that time, confidence began a lengthy slump after President Ferdinand Marcos Jr revealed corruption in government involving billions of pesos in flood-related infrastructure. The graft scandal is unresolved, while Vice President Sara Duterte, who denies wrongdoing, is on trial in the Senate for over alleged unexplained wealth. 

The latest data will heap pressure on Marcos to revive the Southeast Asian nation, which is underperforming neighbours and continues to grapple with market volatility and political uncertainty.

Inflation has remained well above the central bank’s 3% goal since March. The Philippine peso has dropped nearly 7% this year, although it has recouped its recent losses after falling to a record low of 64.20 late October.

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