The Philippines economy grew 5.4% in the first quarter, reflecting the increased uncertainty arising from the Trump administration’s tariffs.
Data from the Philippine Bureau of Statistics shows that gross domestic product (GDP) grew by 5.4% from January to currency period, a sharp slowdown from 5.9% expansion a year ago.
This is also 5.8% of the median forecast for 15 economists BusinessWorld Last week's poll, but faster than revised GDP in the fourth quarter of 2024.
GDP expanded by 1.2% from a revised 1.5% slowdown in the fourth quarter, according to the seasonally adjusted quarter.
“While this rate does not exceed our initial expectations, it reflects the development of global economic activity in the context of ongoing uncertainty due to ongoing uncertainty,” said Rosemarie G. Edillon, Policy and Planning Group, Department of Economics, Planning and Development (DEPDEV) Policy and Planning Group, in a briefing on Thursday.
Prints in the first quarter were also 6-8% below the government's target range.
Ms Eddillon said the remaining three-quarters of the economy should grow at least 6.2% to reach an annual growth of at least 6%.
She said the Development Budget Coordination Committee is scheduled to meet later this month to review MacsThis year's Roscormanic hypothesis.
GDP growth in the first quarter was mainly exacerbated by faster public spending and household consumption.
Government spending grew 18.7% in the first three months of the year, faster than 2.6% a year ago and 9% higher in the fourth quarter. This is the fastest Editing since the second quarter of 2020.
The state government spent infrastructure ahead of the 45-day election ban that began on March 28.
“In fact, government final consumption spending will still grow significantly throughout the year 2025 One year plan,” Ms Edillon said.
Meanwhile, household final consumption expenditure, which accounts for more than 70% of the economy, increased by 5.3% per year from 4.7% of the prints in the fourth quarter.
“For the household's final consumption expenditure, of course, it will affect its interest rates, and then the inflation rate. And, as we've been seeing easing inflation, we hope that this will continue and will have a positive impact on household final consumption,” Ms Edillon said.
As food and transportation costs decline, inflation was 2.2% in the first three months of the year.
At the April meeting, Bangkok Sentral NG Pilipinas (BSP) lowered its benchmark rate by 25 basis points (BPS) to 5.5%. BSP Governor Eli M. Remolona, Jr. They are willing to lower 75 basis points due to cooling inflation, told Bloomberg on Wednesday.
Trade War
depdevfEaster pointed out that investment and external trade provide “Mixed Pictures” for the first quarter.
“We see that this is not the trade war itself, but it is really due to expectations of global trade uncertainty, so more imports will be loaded with more imports in the first quarter,” Ms Edillon said.
Total export growth between January and Mok slowed to 6.2% from 8.1% a year ago. For the quarter, it earned 3.2%.
“The performance of the external sector reflects business strategies that are expected to have greater global trade uncertainty. So even with strong (quarter quarter) growth in exports (6.2% from 3.2%), its net export volumes have contracted sharply from -1.4% performance compared to the previous -19.9% performance.”
Imports rose 9.9% in the first quarter, faster than 2.2% in the same period last year and 2.7% in the fourth quarter.
Because he acceptedfICE in late January, U.S. President Donald J. Trump’s tariff threat triggers uncertainty and rattles markets
In April, the U.S. imposed a 10% benchmark tariff on all its trading partners, while higher countdowns in some countries have been suspended until July.
The investment component of the economy grew 4% in the first quarter, at a rate of 0.8% a year ago, but at a rate of 5.5% in the fourth quarter.
Ms Eddillon said: “The slower growth is due to a significant decline in investment.
She also noted that after a large accumulation in the last quarter of 2024, inventory (-98%) fell sharply.
“They are a little worried that prices may rise or that there may be some problems in the supply chain in the future, so they have “Investment or spending in the first quarter is,” Ms Edillon said.
On the supply side, the service sector, which made the biggest contribution in major industries, grew 6.3% in the first quarter, down from 7% a year ago.
The industry grew 4.5% in the first quarter, slowing from 5.2% a year ago.
From January to March, agriculture, forestry and fishing grew by 2.2%, from 0.5% in the same period a year ago.
Total national income revenue grew 7.5% year-on-year in the first quarter, slightly lower than 9.9% a year ago.
Net primary revenue rose 24.6% in the first quarter, down from 57.8% in the same quarter in 2024.
Ms Eddillon said the first quarter economic data was not disappointing, as global uncertainty was seen as early as January.
Although Ms Edillon said that despite GDP growth below expectations, the Philippines ranked second among Asian neighbors, behind Vietnam (6.9%) and China (5.4%) behind Vietnam (6.9%). Philippines leads Indonesia (4.9%) and Malaysia (4.4%)
“There are actually signs that the economy is still very resilient, such as domestic demand is still strong…but, of course, global demand is not very good – this is during times of volatility.”
Finance Minister Ralph G. Recto said performance underscores the “sustainable strength and resilience” of the economy due to the increased uncertainty.
“We have strong growth, inflation continues to ease, private consumption is rising, and our job market remains vibrant. These obvious signals are accelerating domestic demand, which is our strongest shield against external headwinds and trade wars,” Mr Recto said.
“tedious”
The first-quarter economic data overwhelmed analysts and expected the central bank to continue to relax in support of growth.
“While household spending ultimately increased government election and pre-election spending, it performed poorly relative to expected growth,” HSBC economists said.
Mr Dakani said he expects growth in the Philippines to weaken in the second half of the year because of the impact of trade uncertainty on the global economy.
He added: “Growth is expected to be below the government's target band of 6-8% and we expect BSP to continue to relax the cycle. More specifically, we're seeing BSP lower its policy rate to 5% of Year to support growth.”
The next policy meeting for BSP will be held on June 19.
Sunny Liu, a leading economist at Oxford Economics, said GDP is expected to grow 5.5% this year this year after surpassing expectations for the first quarter prints.
“To support growth, we expect the central bank to maintain a certain monetary stance, and reduced the tax rate by another 25 taels in the second half of the year. Increased external uncertainty and its adverse impact on investment should have an impact on growth,” she said.
ANZ economist Arindam Chakraborty and chief economist for Southeast Asia and India said GDP growth was “unprecedented.”
They noted that private consumption growth remains below the average growth rate of 6.2% in the five-year pre-pandemic period. They added that the rise in consumer spending is also driven by favorable fundamental effects.
ANZ economists now expect Philippines GDP to grow by 5% this year, noting that external demand and investment may ease amid slowing global growth.
“As of now, we expect BSP to be lowered twice in 2025 with a final interest rate of 5%,” they said.
For Chinabank research, the growth of household consumption provides some optimism for sustained growth.
However, it said external trade may remain a “weakness” as the country handles U.S. tariffs and a possible global slowdown.
“Exceeding Q1 GDP prints and loose inflation have increased the interest rate lowered from BSP.” – Aubrey Rose A. Inosante
