Philippines economic growth It may have been picked up in the first quarter due to faster government spending before cooling inflation and election ban BusinessWorld Polls show.
According to median forecasts, the Philippines' gross domestic product (GDP) is expected to grow by 5.8% in March from January to March. BusinessWorldstarting from 5.3% revised in the fourth quarter of 2024.
However, this will be a little slower than the 5.9% growth recorded in the first quarter of 2024.
This will also lower the government's full-year growth target range of 6%-8%.
The Philippine Statistics Bureau is scheduled to release preliminary first-quarter GDP data on May 8.
Before the release of public funds that began on March 28, economic growth may be supported by ease of inflation and higher government spending.
Nicholas Antonio T.Marca, chief economist at Metropolitan Bank and Trust.
As food and transportation costs grew slowly, the average inflation rate in the first quarter was 2.2%. In March alone, inflation rose to 1.8%, the slowest in five years or 1.6% since May 2020.
“Private consumption growth is also likely to grow as a result of strengthening the continued decline in headline inflation,” said Euben Paracuelles, an analyst at Nomura Global Markets Research.
Household final consumption expenditure accounted for more than 70% of the economy, up 4.7% in the fourth quarter, slowing from 5.2% in the third quarter and 5.3% in the same quarter in 2023.
“[First-quarter GDP] Especially driven by higher consumption and government spending in infrastructure. This is specialWith financial efforts supported, this is right growing up.
Government spending rose 23.89% in the first quarter to $14.77 trillion, already accounting for a quarter of this year's P6.2 trillion spending plan.
In January-May, state spending on infrastructure jumped 23.1% to 148.3 billion to 148.3 billion between January-May, separate data showed.
“The improvements in (GDP) are partly due to lower basic impacts, but also reflect election-related spending and stronger public sector capital expendituresbooster,” Mr. Paracrels said.
With the 90 campaign periods for national candidates starting in February, election-related spending is expected to drive consumer spending faster. The campaign period for local candidates begins on March 28.
“Election expenditure should provide lifts [to consumption]government spending continues to move forward. ”
The Philippines' GDP growth rate has been high in the past election years – 7.1% in 2016 (6.3% in 2015) and 7.1% in 2022 (5.7% in 2021).
Meanwhile, Sentral Ng Pilipinas (BSP) in Bangkok has lowered tax rates and may cancel investment activities.
“One factor is the low interest rates that affect improvements in private investment,” said Patrick M. Ella, an economist at Sun Life Investment Management and Trust Corp.
In the last three meetings since August 2024, the BSP reduction rate has been reduced by 25 basis points, and the benchmark will reach 5.75% by year-end. It unexpectedly kept rates steady at its February meeting.
Trade tensions
Ruben Carlo O. Asuncion, chief economist at United Bank of the Philippines, said business sentiment in the first quarter was a hindrance to overall spending and growth as the company prepared for U.S. tariffs.
“Amid the ongoing global trade uncertainty, the problem is that the expected first-quarter GDP growth will exceed the growth in the second half of 2024, which is the best profit we have achieved this year. We hope to see more BSP reductions slow down, thus mitigating high real-life interest rates and growing higher real-life interest settings and growing Trump 2.0 Trump 2.0 Tarriff 2.0 Tailiff Hike hike Mr. assuncion.”
Analysts also say growth could be affected more widely The trade deficit in the first quarter.
“We believe that negative growth factors are expanding imports beyond exports and capital formation as business sentiment declines,” said Angelo B. Taningco, vice president and head of research at Security Bank.
In the first quarter, the trade deficit was $12.71 billion, up 12.8% from the $11.26 billion gap a year ago. In the first three months of 2025, exports rose 5.9% to $19.27 billion, while imports rose 8.4% to $31.98 billion.
HSBC Aris D. US tariff announcement.
“The Philippines is better insulated than others in Asia than the expected weakness of chaotic U.S. tariff policies and global commodity trade, because domestic consumption is part of GDP,” Katrina El, director and head of Moody’s analysis. Asia Pacific Economics, said.
In February, U.S. President Donald J. Trump began raising tariff threats to Mexico, Canada and China, as well as other trading partners. Some tariffs have been imposed, while others have been suspended.
Mr. Trump announced a 10% benchmark tariff on all trading partners, and Higher “reciprocal tariffs” in April.
The United States shot 17% of mutual tariffs in the Philippines, the second lowest in Southeast Asia. However, Mr. Trump suspended higher levies until July, allowing countries to negotiate with the United States.
For the rest of the year, Mr Eris said he expects economic growth to be negatively affected when higher tariffs take effect.
“Unless trade negotiations with the United States are successful, this will greatly affect exports. Investments may be particularly affected by FDI, as investors are concerned about where to put capital, manufacturing and currency in the face of uncertainty,” Mr Erece said.
“We still believe that these concerns will be offset by faster consumption and infrastructure.” – mmmlcastillo
