Still 2nd best economic performance in Asia – DEPDev
THE Philippine economy grew 5.4 percent in the first quarter of 2025, slowing from 5.9 percent a year earlier, but still outperformed other economies in Asia, official data showed on Thursday.
The pace of expansion in the country’s gross domestic product (GDP) in January to March as reported by the Philippine Statistics Authority (PSA) stood below the government’s assumption of 6 percent to 8 percent for full-year 2025.
It was also lower than the 5.7 percent median estimate by analysts in a poll conducted by this paper last Friday.
GDP is the total value of goods and services produced by a country in a specific period.
Department of Economy, Planning, and Development (DEPDev) Undersecretary for Policy and Planning Rosemarie Edillon said in a news conference in Quezon City on Thursday the first quarter economic performance is “not quite a disappointment,” adding that it actually shows signs of steady growth.
“There are many layers to these GDP results, born out of the uncertainty that businesses have anticipated by employing strategies ahead of more uncertainties,” Edillon said, adding that there is also cause for optimism.
During the press conference, Edillon read out a statement by DEPDev Secretary Arsenio Balisacan: “While this pace falls short of our initial expectations, it reflects developments from the broader global context of tempered economic activity amid persistent uncertainties.”
Ranks 2nd with China
Balisacan said in the same statement the Philippine economy’s first quarter performance ranked second with China in terms of the percentage rate of growth among the GDP results released by Asian neighbors for the period.
Vietnam saw a faster expansion of 6.9 percent, while China also grew 5.4 percent year-on-year.
The Philippines outpaced Indonesia’s 4.9 percent, Malaysia’s 4.4 percent, and likely that of Thailand. Balisacan said Thailand’s GDP was expected to grow 2.8 percent in the first quarter.
“Our concise description of the first quarter economic performance is ‘a measured start.’ This performance underscores the relative resilience of our economy in the face of global volatility,” Balisacan said.
Key pillar of growth
PSA data showed the main contributors to the country’s first quarter growth were wholesale and retail trade; repair of motor vehicles and motorcycles; financial and insurance activities; and manufacturing.
“Domestic demand remained a key pillar of growth, expanding by 6.7 percent,” Balisacan said, noting also that easing food inflation supported household final consumption, which grew by 5.3 percent.
“Government expenditure growth surged to 18.7 percent, reflecting the frontloading of public programs in anticipation also of the election ban,” he added.
All major economic sectors posted year-on-year improvements in the first quarter of 2025.
Agriculture, forestry, and fishing contributed 2.2 percent, industry 4.5 percent, and services 6.3 percent.
Balisacan said these numbers reveal a stable, albeit cautious expansion across sectors.
A mixed picture
“Looking at investment and external trade is actually a mixed picture,” Balisacan said.
“Fixed capital formation grew faster at 5.9 percent despite the moderation in private construction, particularly corporate constructions,” he said, noting that “investment in the other components, including durable equipment, also increased.”
“However, there was a significant drawdown in inventories, coming off a substantial buildup in Q4 2024,” he said.
“The external sector’s performance reflects business strategies that were employed in anticipation of greater uncertainty in global trade,” Balisacan said.
“Thus, even with the strong growth of exports, net exports contracted sharply by 19.9 percent from its previous performance of -1.4 percent,” he said.
“The contraction was driven by the rise in goods imports, particularly in transport equipment, industrial machinery and electrical machinery,” Balisacan added.
Edillon said for the rest of the year, the economy will have to grow 6.2 percent on average to achieve the lower end of the government’s full-year GDP outlook between 6 percent and 8 percent.
“Of course, we know that, in terms of previous experience, this is actually within the range of possibilities,” she said.
“But whether or not this is still achievable on the basis of what we think would likely happen for the rest of the year is something that we will have to discuss with our counterparts, with our colleagues in the DBCC (Development Budget Coordination Committee),” Edillon added.
Strong domestic demand
DEPDev remains optimistic because of the first quarter numbers that reveal how the economy is quite resilient, and domestic demand remains strong.
“But of course, global demand is in a period of volatility and how we place in this period of volatility is again something that we will also need to discuss,” Edillon said.
Urgency of policy making
Balisacan said the first quarter’s performance reinforces the urgency of strategic policy making, accelerated structural reforms toward economic diversification and efficient and effective delivery of programs and projects as the government nears the mid-term of the Marcos administration.
“We should note that amid the ongoing trade war, multilateral institutions such as the International Monetary Fund and the World Bank consistently project the country to remain one of the fastest-growing economies in the region this year,” he said
“However, this is no reason for complacency,” Balisacan stressed.
Managing inflation remains a top priority to ensure that consumer prices remain affordable, he said.
“Amid the global realignment of trade and investments, the government must accelerate its efforts to expand trade partnerships with key economies such as the European Union, United Arab Emirates, United States and other potential markets,” Balisacan said.
“Such engagements will allow us to diversify our export markets, secure broader market access, ensure our businesses become part of global value chains and ensure food availability and affordability,” he added.
Main growth drivers
Meanwhile, Finance Secretary Ralph Recto said in a separate statement the government remains confident in achieving its 6 percent GDP growth target in the coming quarters.
The main drivers would be a steady fiscal consolidation, easing inflation and progress in trade negotiations with key partners, he said.
“Our performance highlights the continued strength and resilience of the Philippine economy, even amid rising global uncertainties. Our growth is strong, inflation continues to ease, private consumption is rising and our job market remains vibrant,“ Recto said.
“These are clear signals of accelerating domestic demand ahead, which is our strongest shield against external headwinds and trade wars,” he added.
