THE Philippine economy registered a 5.4 percent year-on-year growth in the first quarter of 2025, marking a “measured start” to the year, according to preliminary data presented by the Department of Economy, Planning and Development on Thursday, May 8, 2025.
While slightly faster than the previous quarter’s 5.3 percent, this growth falls short of the government’s initial expectations and is slower than the 5.9 percent expansion in the same period last year.
Delivering the statement on behalf of Secretary Arsenio M. Balisacan, who is attending the Asian Development Bank’s annual meeting in Italy, Undersecretary Rosemarie Edillon highlighted that the Philippines ranked second among major Asian economies that have released their first quarter gross domestic product (GDP), tying with China and trailing only Vietnam (6.9 percent), while outpacing Indonesia (4.9 percent), Malaysia (4.4 percent) and Thailand (forecasted at
2.8 percent).
This performance, she noted, underscores the relative resilience of the Philippine economy amid global uncertainties.
In a separate statement, Finance Secretary Ralph Recto lauded the country’s first quarter performance amid various economic challenges.
“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. These are clear signals of accelerating domestic demand ahead, which is our strongest shield against external headwinds and trade wars,” said Recto.
The report painted a mixed picture for investment and
external trade.
Fixed capital formation saw faster growth at 5.9 percent, driven by increased investment in durable equipment, despite a moderation in private construction.
However, there was a significant drawdown in inventories. The external sector saw strong export growth (6.2 percent), but net exports contracted sharply (-19.9 percent) due to a surge in goods imports (9.1 percent), particularly in transport equipment, industrial machinery and electrical machinery. Services imports also expanded.
More reason to cut interest rates
Domestic demand remained a key driver, growing by 6.7 percent, fueled by easing food inflation supporting household consumption (5.3 percent) and a significant surge in government expenditure (18.7 percent), attributed to the frontloading of public programs ahead of the election ban. On the production side, agriculture grew by 2.2 percent, industry held steady at 4.5 percent and services posted a robust growth of 6.3 percent.
Adding his perspective, Cebuano businessman Steven Yu said, “The first quarter growth of 5.4 percent is expected, considering the lackluster consumption pattern that we experienced in February and March. It is better than the fourth quarter 2024’s 5.3 percent which makes it promising but it is also subdued enough to give the Bangko Sentral ng Pilipinas (BSP) more reason to cut interest rates.”
Yu further suggested that the combination of this growth figure and the low inflation rate year-to-date provides the BSP with “room to implement three quarter-point cuts (0.75 percent) this year.” He also emphasized “the relative urgency to prop up our economy by cutting interest rates sooner than later, before any further permanent damages set in.”
Meanwhile, Edillon emphasized the urgency of strategic policymaking and accelerated structural reforms to sustain growth, particularly given the ongoing global trade uncertainties. While multilateral institutions project the Philippines to remain one of the fastest-growing economies in the region, complacency is not an option, she stressed.
Managing inflation remains a top priority, with the April 2025 rate of 1.4 percent indicating the effectiveness of current interventions. The government is focused on stabilizing pork supply through African Swine Fever vaccine rollout and implementing strategic supply-side interventions to protect consumer purchasing power and create space for a more accommodative monetary policy.
To spur investment growth, the government is committed to continuing reform momentum, attracting and facilitating investments, and accelerating critical infrastructure development. Key economic reforms aimed at strengthening governance in critical industries and opening up the market to greater private-sector participation are being prioritized.
Expanding trade partnerships
The government also aims to expand trade partnerships with key economies like the EU, UAE, and the US to diversify export markets and integrate MSMEs into global value chains. On the supply side, focus will be on capitalizing on higher value-added activities in the services sector and investing in human capital development through upskilling and reskilling initiatives outlined in the recently released Trabaho Para sa Bayan Plan. The tourism sector is also identified as having significant untapped potential.
On the fiscal front, efficient public spending and catch-up plans for delayed programs post-election are critical. The Economic Team is working to strengthen the linkages between planning, resource programming, and budgeting, with enhanced monitoring and evaluation to ensure resources are directed towards impactful programs.
Edillon reiterated the government’s optimism for sustained and accelerated progress, driven by decisive action, targeted investments, innovation and sound macroeconomic fundamentals, with a long-term vision of resilient and inclusive economic growth that translates into tangible benefits
for Filipinos. / KOC