Adi Joaquim Tolentino

The Philippine Statistics Authority (PSA) reported that the Philippine economy grew by 5.4 percent in the first quarter of 2025, falling short of market expectations and the government’s annual target.

Photo Courtesy of Bangkok Post.

In a statement on May 8, House Speaker Martin Romualdez downplayed the slower growth, saying the economy is still “moving in the right direction” and that recent gains are creating “more jobs, livelihood, and greater economic activity in our communities.”

“This growth means more than just numbers. It means jobs, livelihood, and greater economic activity in our communities,” he said.

Romualdez said the expansion in sectors like manufacturing, construction, logistics, tourism, and digital services has created more job opportunities and boosted local economies.

“The economy is moving and it’s moving in the right direction, because the President’s policies are working not only for investors and big businesses but more importantly for ordinary Filipinos,” he said.

The gross domestic product (GDP) growth from January to March was slightly faster than the previous quarter’s 5.3 percent but below the 5.9 percent posted in the same period last year.

The figure also missed the government’s full-year target of 6 to 8 percent, as well as the 5.9 percent consensus forecast from a recent Inquirer poll of economists.

Despite the lower-than-expected result, Socioeconomic Planning Secretary Arsenio Balisacan described the growth as a “measured start” given prevailing global risks such as elevated interest rates and tariff uncertainties abroad.

All major sectors of the economy still recorded year-on-year growth in the first quarter as agriculture, forestry, and fishing grew by 2.2 percent, industry by 4.5 percent, and services by 6.3 percent.

The main contributors to economic activity were wholesale and retail trade, up to 6.4 percent, financial and insurance activities, up to 7.2 percent, and manufacturing, up to 4.1 percent.

On the demand side, household spending picked up to 5.3 percent, faster than the 4.7 percent posted in the fourth quarter of 2024.

Government spending surged to 18.7 percent ahead of the midterm elections, from just 9 percent in the previous quarter.

However, gross capital formation, the investment component of GDP, slowed to 4 percent due to persistently high interest rates.

Despite the slower-than-expected 5.4 percent GDP growth in the first quarter, the Philippines remains on track to reach upper-middle-income status by 2025, with the Philippine Institute for Development Studies (PIDS) projecting a 6.1 percent full-year growth supported by easing inflation, steady remittances, rising household spending, and infrastructure investment.