By Aubrey Rose A. Inosante, Reporter
THE PHILIPPINE ECONOMY could have increased by 6% during the initial quarter, Finance Secretary Ralph G. Recto stated.
When asked for his estimate of the gross domestic product (GDP) for the first quarter, Mr. Recto informed BusinessWorld that he anticipated a growth of 6%.
If this materializes, a 6% GDP rise in the January-to-March timeframe would be slightly above the amended 5.9% growth in the first quarter of 2024.
It would also align with the lower end of the Philippine government’s growth objective range of 6-8% for this year.
The Philippine Statistics Authority is set to publish first-quarter GDP figures on May 8.
In response to whether his prior GDP growth estimate for 2025 of 6-6.5% remains feasible in light of the US tariffs, Mr. Recto answered: “Yes.”
Last week, National Economic and Development Authority Secretary Arsenio M. Balisacan expressed optimism that the economy grew by at least 6% in the first quarter, driven by rate reductions and easing inflation that stimulated domestic spending.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort mentioned in an email that first-quarter GDP likely grew by 6.3%.
He noted an expectation that household expenditure might have risen by 5% in the initial three months of 2025 compared to 4.7% last year, bolstered by “benign” inflation.
During the first quarter, inflation averaged 2.2%, well within the central bank’s target range of 2-4%.
Mr. Ricafort indicated that consumption could have been fueled by “some of the strongest employment statistics in nearly 20 years, ongoing growth in remittances from overseas Filipino workers, revenue from business process outsourcing, [and] earnings from tourism.”
However, several analysts predict that growth in the January-to-March timeframe may fall below 6%.
Moody’s Analytics economist Sarah Tan stated that the economy may have expanded by 5.5% in the first quarter.
“Private consumption should rise 5.2% year on year, backed by lower borrowing costs as the effects of monetary easing work through the economy. That will relieve some pressure on household finances,” Ms. Tan expressed in an emailed statement on April 11.
The Bangko Sentral ng Pilipinas halted its easing measures in February but reduced rates by 25 basis points at the meeting on April 10. This adjustment brought the target reverse repurchase rate to 5.5% from 5.75% previously.
Ser Percival K. Peña-Reyes, director of the Ateneo Center for Economic Research and Development, commented in a Viber message that “construction, transport and storage, and accommodation and food service sectors” likely contributed to GDP growth of 5.4% in the first quarter.
He mentioned that household consumption might have increased by 4.6% during the January-to-March period.
When asked about the rationale behind a relatively lower GDP forecast, Mr. Peña-Reyes replied that elections no longer provide a significant boost to economic growth in the Philippines.
Mr. Balisacan previously indicated that election-related spending would likely be “muted” compared to past elections as more candidates allocate a greater portion of their campaign budgets to social media advertisements.
TARIFF THREAT
In the meantime, the outlook for the second quarter may be complicated by the upheaval resulting from US President Donald J. Trump’s tariff policies.
Mr. Trump announced on April 9 a pause on new reciprocal tariffs for 90 days, while the baseline 10% tariff on nearly all US imports remained in effect. The Philippines faced a 17% reciprocal tariff, the second lowest among Southeast Asian nations.
“The immediate threat to the forecast for the remainder of 2025 will be sluggish export growth due to hikes in US tariffs, which render Philippine goods to the US more expensive and less competitive. This is troubling since the US is the Philippines’ primary export market,” Ms. Tan remarked.
She also highlighted that rising tensions between the US and its trade partners could dampen external demand for the country’s products, potentially restraining production.
“We project the Philippines to grow 5.8% this year, but this could be revised downwards if the escalating US-China trade conflict results in significant disruptions to the global economy,” Ms. Tan indicated.
The Philippines exported $12.14 billion worth of goods to the US in 2024.
Mr. Ricafort mentioned that the decline in inflation could justify additional rate cuts “which would fundamentally lead to faster GDP growth than otherwise.”
“However, counterbalancing risk factors include higher US import tariffs enacted by President Trump, reciprocal tariffs, and other protectionist measures that could slightly diminish GDP growth commencing in the second quarter of 2025,” Mr. Ricafort stated.
Notwithstanding the tariff risks, he mentioned that second-quarter growth could still reach 6%, fueled by election-related spending.
Ms. Tan anticipates an uptick in government expenditure in advance of the midterm elections on May 12.
Mr. Peña-Reyes predicts the economy will expand by 5.9% in the second quarter, as well as for the entire year.
Mr. Balisacan suggested that it might be premature to adjust the full-year growth targets during the Development Budget Coordination Committee’s meeting in May.
Nevertheless, he noted that achieving the upper limit of the 6-8% target could be unrealistic amid global uncertainties regarding US tariff policies.
