Finance Secretary Ralph Recto is optimistic the economy’s performance in the first quarter of 2025 likely grew at a faster rate than the year-earlier pace.
Recto told Malaya Business Insight on Monday that although it was too early to make growth estimates for the quarter, he said he expects the Philippine economy to expand by at least 6 percent.
“Too early to make projections. The first quarter is not done yet. Having said that, I expect the economy to grow by at least 6 percent,” Recto said.
This is in line with the government’s full-year growth assumption of 6 to 8 percent for gross domestic product (GDP).
In the first quarter of 2024, GDP expanded by 5.8 percent, while in the fourth quarter of last year, growth came in at 5.2 percent.
Recto did not elaborate on possible growth drivers during the three months.
Election spending
On Monday, however, a report released by the University of Asia and the Pacific (UA&P) identified some of the factors that might have supported the country’s economic performance in the first three months of 2025.
“We expect a robust rebound in consumer expenditures in Q1 due to large national government deficits and election spending, low inflation at the lower end of BSP’s inflation target, and major employment gains with infrastructure outlays bulging prior to the election spending ban,” UA&P’s March issue of the Market Call Capital Markets Research said.
“In addition, we see a resurgence in investment spending as major infrastructure and public-private partnership projects gain further traction,” the report, prepared by UA&P senior economist Victor Abola and research assistant Marco Antonio Agonia, said.
According to the previous month’s issue of the Market Call, the Philippine economy is expected to post a 6.5 percent expansion in the first quarter of 2025.
Meanwhile, the latest report also mentioned that the Philippine Stock Exchange index rebounded to 6.291.40 by March 14th, but was likely to remain rangebound until April 15, the deadline for income tax payments for fiscal year 2024.
“We may see an upswing beyond the resistance level of 6,600 as we expect BSP to cut policy rates by 25 basis points to 5.5 percent in its April 10 meeting. Robust corporate earnings that will emerge for Q1 mostly in May and a likely Q1 GDP growth of 6.5 percent should bolster investor confidence,” the report said.
Political risks
“The main risk that threatens this outlook would be Philippine politics in case of disorderly and disruptive elections and/or outcomes,” it added.
Meanwhile, GlobalSource Partners (GSP) country analysts, former central bank deputy governor Diwa Guinigundo and Wilhelmina Manalac, said in a March 14 report GDP growth may be expected to increase within a narrow band over the first two quarters of the year, rising from just above 5.7 percent in the first quarter to about 5.9 percent in the second quarter.
“This modest upward trend is driven by resilient historical GDP performance, growth in the services sector, and short-term USD/PHP exchange rate effects,” the report said.
“However, if both domestic and geopolitical shocks occur in a big, adverse way, they could unsurprisingly alter the outcome of this initial analysis,” it added.
