Asked what the first quarter economic performance means for businesses and consumers, John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said:
“The slower 5.4 percent growth means the Philippine economy is still growing, but not as fast as expected. For businesses, this might mean they’ll be more careful. Some may delay hiring or expanding until things become more stable.”
“For ordinary Filipinos, this could mean fewer job opportunities or slower increases in income. With challenges like global trade problems, both companies and consumers may hold back on spending for now and focus more on saving and essential needs,” Rivera added.
People and businesses are still cautious, possibly due to the uncertainties brought about by US tariffs, a slowdown in global demand, or slower government spending, he said.
“In simple terms, even if prices are not rising fast, people might not be spending or investing much because they are unsure about what’s coming next,” he said.
First quarter growth, while moderate, still leaves open the possibility of hitting the lower end of the government’s full-year target, Rivera said.
“However, doing so will require a stronger rebound in the next three quarters particularly Q2, which will be shaped by election-related spending, fiscal push and consumption recovery,” Rivera stressed.
Reinielle Matt Erece, economist at Oikonomia Advisory & Research Inc., said the easier pace of growth in Q1 may be a sign of weaker demand and lower production that may cause businesses to lighten capacity or even close down – as a result there would be a higher unemployment rate, or even lower wages.
“On the side of the government, slow growth can be improved by spending more on productive endeavors to jumpstart the economy,” Erece said.
“Therefore, the fiscal and monetary sectors have an important role in ensuring that economic activity remains robust,” Erece noted.
“This will ensure that consumers have the ability to afford goods and services, and this may improve revenues for businesses, which, hopefully, encourages them to invest in expanding their capacity and create jobs in the process,” he added.
ING regional head of research for Asia-Pacific Deepali Bhargava said the disappointing thing in the first quarter was net export and investment growth.
“This highlights uncertainty around business confidence amid tariff escalations and a slowdown in trade,” she said.
ING has revised its 5.6 percent full-year 2025 forecast for the Philippines from its previous estimate of 6.1 percent.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said some Philippine exporters, especially those that rely on the US market, could be cautious in terms of production, new investments and expansion since US President Donald Trump’s tariffs could reduce demand.
“Trump’s reciprocal tariffs, trade wars and other protectionist policies could still slow down global trade, investments, employment and overall world economic growth that could slow down, indirectly, Philippine GDP growth,” he said.
“Though (it could be) offset by midterm election-related spending, benign inflation, and interest rate cuts that could make borrowing costs cheaper and increase demand for loans or credit, and also lead to faster growth in investments,” he added.
2025 ‘off to a good start’
Carlo Asuncion, chief economist at Union Bank of the Philippines, said that with the current persisting environment the government will revise its goals accordingly.
For Q1 2025 GDP, “it’s actually off to a good start, but we expected a higher clip of 5.7 percent year-on-year based on higher government spending, especially considering the difficult external environment,” he said.
“Indeed, government consumption delivered with double-digit growth of 18.7 percent, but it was gross capital formation that was lower at 4 percent, with construction only at 6.8 percent growth,” Asuncion added.
