go through Aubrey Rose A. Inosante, reporter
The Bureau of Statistics said Thursday that the Philippines’ economy grew slightly faster in the second quarter, driven by strong agricultural production and consumption growth.
Preliminary data released by the Philippine Statistics Agency (PSA) showed that the Philippines’ gross domestic product (GDP) grew by 5.5% per year between April and June, up from 5.4% in the first quarter.
It also matches the 5.5% median prediction in A BusinessWorld Polls said the government’s lower end of the 5.5% to 6.5% growth target this year.
However, this is slower than the 6.5% growth in the second quarter of 2024.
On a quarter of the seasonal adjustment, the country’s GDP grew by 1.5%, up from 1.3% a year ago.
“The Philippines economy continues to show resilience and stability, even as global challenges persist and fuel uncertainty in many ways,” Arsenio M. Balisacan, secretary of the Ministry of Economics, Planning and Development (DEPDEV), said in a briefing on Thursday.
“With this performance, we have maintained our position among the fastest growing economies in emerging Asia,” he said, adding that the Philippines lags only behind Vietnam (8%) and China (5.2%) and Indonesia (5.1%) (5.1%).
While the Philippines may lag India’s projected growth of 6.5%, Mr Barisakan said Malaysia’s projected GDP growth rate is 4.3%, and Thailand’s 2.4% may surpass Malaysia’s projected growth of 4.3%.
In the first half of the year, GDP growth averaged 5.4%, slower than 6.2% a year ago.
Mr Balisacan said the remaining time of the year would have to grow by 5.6% to achieve the low end of the full-year target.
“I think we can do better in the second half of the year. (I) are confident that inflation has dropped significantly, and the reduction in policy interest rates in the past is now starting to feel it,” he said.
Inflation slowed to a six-year low in July as utilities and food costs continued to ease. Inflation was 1.7% in the first seven months of the year, a little bit higher than the central bank’s 1.6% forecast in 2025.
Bangko Sentral Ng Pilipinas (BSP) lowers benchmark interest rates by 125 basis points Since its easy cycle began last August.
To reach the top of the target, the DEPDEV chief said the economy must grow 7.5% between July and December.
“Of course, 7.5% are high, but that’s not impossible. I think if we see continued improvement in consumer and domestic investors’ confidence, (we can see) higher growth in consumption, investment and services,” he said.
PSA data shows that household final consumption accounts for more than 70% of the economy, up 5.5% between April and June. This is faster than 4.8% in the second quarter of 2024, but slower than 5.3% in the first quarter. This is the fastest since the first quarter of 2023 growth of 8.1%.
“Our strategic, sustained and coordinated efforts to manage inflation and safeguard purchasing power are having an impact. In particular, rice prices are a major concern for households, with a steady decline in recent recent times. several months,” Mr. Barisakan said.
The election-related public works ban weakened government final consumption spending, up 8.7% in the second quarter from 18.7% in the first quarter and 11.9% a year ago.
National statistician Claire Dennis S. Marca (Claire Dennis S.
The 45-day ban on public works elections began on March 28 and ended with the May 12 election.
“We expect to maintain this momentum in terms of spending. In the second half of the year, you should see improvements in construction, public building spending, because it is there we have slowed down, but that is expected due to the election ban.”
Tariff uncertainty
Uncertainty over U.S. tariffs have begun to have an impact on the Philippines economy as growth slowed in exports, industries and investments in the second quarter.
In the April-June period, total export growth rose 4.4%, playing a pace from 3.9% a year ago, but slowing from 7.1% growth in the first quarter.
Driven by semiconductors, commodity exports also rose 13.6% in the second quarter. Higher tariffs come into effect.
The United States has set a 19% tariff on Filipino goods, which will take effect on August 7.
“I want the local economy to stabilize with all these tariff uncertainties, and although they still exist, I think this is the end of the series of announcements. We hope that expectations for trade will not stabilize further Uncertainty,” Mr. Balisakan said.
Meanwhile, service export revenue in the second quarter was 4.2%, reversing the previous quarter’s growth of 6.3% and 7.6% a year ago.
“This may be following the overall situation of the global economy. In recent months, we have seen slowdowns and uncertainties in the trade sector, including trade and services,” Balisacan said.
On the other hand, imports of goods and services slowed to 2.9% in the second quarter, slower than 5.3% in the same period last year and 10.3% in the first quarter.
The total capital formation of the economy increased by 0.6% in the second quarter, up 11.5% from the same period last year and 4.8% in the first quarter.
“I think we will see a rebound in investment in the second quarter. The election ban has ended, so we should continue, and that should be a positive factor. The domestic investment climate is improving, as seen as the continued decline in interest rates.”
agriculture
On the supply side, agricultural output rose 7% in the second quarter, the fastest in nearly 14 years, or 8.3% recorded in the second quarter of 2011.
Mr Balisacan attributed the strong rebound in agricultural output to Palay and Corn, up 14.2% and 29.8% respectively.
The service industry’s biggest contribution to major industries grew by 6.92% in the second quarter, faster than the 6.87% year-on-year period.
The industry grew 2.1% in the second quarter, down from 7.9% a year ago and 4.6% in the first quarter.
“The industry’s growth slowed to 2.1%, affected by the decline in output from coke and refined petroleum products (-12.2%), chemical products (-6.6%), and computer and electronics (-2.5%),” Mr Balisacan said.
Food manufacturing rose 9.3%, slightly lower than 10.8% in the previous quarter.
The PSA said the key contributors to the second quarter growth included wholesale and retail trade, repairs of automobiles and motorcycles (5.8%), mandatory social security (12.8%), and financial and insurance activities (5.6%).
Total national income revenue grew at 8.2% in the second quarter, slightly lower than the 8.1% expansion a year ago.
Net primary revenue rose 38.8% in the second quarter, up from 25.8% in the same period in 2024.
Growth prospects
Gareth Leather, senior Asian economist in Capital Economics, said In the comments, they expect “steady” growth for the rest of the year, as lower inflation and lower interest rates will support domestic consumption. They believe that the Philippines’ GDP growth averages 5.5%, meeting The low end of government goals.
Leather says, however, the “fragile” external environment poses a risk to the prospect.
“Trump tariffs and weaker global demand mean export growth is likely to slow further in the coming months.”
ANZ Research added that external headwinds can also affect private investment.
“Private investment remains constrained by declining productivity and slowing global growth… Given the soft appearance of external demand, private investment is unlikely to rebound in the near future. However, a strong increase in capital goods imports in June showed an increase in government capital expenditures. This can help partially offset the weakness of private total fixed CAPITal formed,” it said in a report.
Although inflation has eased, private consumption will continue to be lowered by low wages. “Overall, we predict that 2025 growth will reduce the 5.1% growth to 5.1%.
“We believe private investment spending will be more subdued, as businesses turn more cautious owing to surging global trade policy uncertainty and an increasing challenging operating environment. In the same vein, we expect goods export growth to slow due to the impact of US tariffs, but acknowledge rising downside risks particularly from sectoral tariffs on semiconductors in the coming quarters,” Nomura Global Markets Research said in a separate note.
It expects the economy to grow by 5.3% throughout the year. “Our forecast Pencil’s growth rate in GDP growth slowed from 5.4% in the first half to 5.2% in the second half, even if we expect a rebound in public investment spending.”
Reyes Tacandong & Co. Senior consultant Jonathan L. Ravelas said global trade uncertainty and supply chain risks are “red flags” for long-term growth.
“We are on track but there is no cruising,” Mr. Ravelas said. “Stakeholders should double consumer confidence, unlock private investment and take advantage of it.” [the agriculture sector’s] momentum. ”
“The second half is crucial – it’s time to push rather than pause.”
