GDP likely grew by 6% in Q1 — Recto

cooling inflation drove domestic consumption. 

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort, said in an e-mail that first-quarter GDP likely expanded by 6.3%. 

He said he expected household spending to have grown by 5% in the first three months of 2025 versus 4.7% last year, supported by “benign” inflation.  

In the first quarter, inflation averaged 2.2%, well within the central bank’s 2-4% target range. 

Mr. Ricafort said consumption may have been driven by “among the strongest employment data in nearly 20 years, continued growth in overseas Filipino workers’ remittances, business process outsourcing revenues, [and] tourism receipts.” 

However, some analysts expect growth in the January-to-March period to settle below 6%. 

Moody’s Analytics economist Sarah Tan said the economy may have expanded by 5.5% in the first quarter. 

“Private consumption should lift 5.2% year on year, supported by lower borrowing costs as the effect of monetary policy easing filters through the economy. That will ease the pressure on household budgets,” Ms. Tan said in an e-mailed statement on April 11. 

The Bangko Sentral ng Pilipinas paused its easing cycle in February but cut rates by 25 basis points at the April 10 meeting. This 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, said in a Viber message that “construction, transport and storage, and accommodation and food service activities” likely drove GDP expansion to 5.4% in the first quarter. 

He said household consumption may have grown by 4.6% in the January-to-March period. 

Asked for the reason of a relatively slower GDP projection, Mr. Peña-Reyes said that elections no longer provide a significant boost to Philippine growth. 

Mr. Balisacan earlier said that election spending would likely be “muted” compared with previous elections as more candidates are allocating more of their campaign funds on social media ads.  

Tariff threat 

Meanwhile, the outlook for the second quarter may be clouded by the turmoil caused by US President Donald J. Trump’s tariff policies. 

Mr. Trump on April 9 paused the new reciprocal tariffs for 90 days, although the baseline 10% tariff on almost all US imports remained in effect. The Philippines faced a 17% reciprocal tariff, which was the second lowest among Southeast Asian countries. 

“The immediate risk to the outlook for the rest of 2025 will be slowing export growth due to the hike in US tariffs. These make the Philippines’ goods to the US more costly and less competitive, which is concerning because the US is the Philippines’ largest export destination,” Ms. Tan said. 

She also noted that escalating tensions between the US and its trading partners could dampen external demand for the country’s goods, potentially slowing production. 

“We expect the Philippines to expand 5.8% this year, but this could be revised lower should the heightened US-China trade war cause significant disruptions to the global economy,” Ms. Tan said. 

The Philippines exported USD12.14 billion worth of goods to the US in 2024. 

Mr. Ricafort said the easing inflation trend would justify further rate cuts “that would fundamentally lead to faster GDP than otherwise.” 

“However, offsetting risk factors include US President Trump’s higher US import tariffs, reciprocal tariffs, and other protectionist policies that could slightly reduce GDP growth starting the second quarter 2025,” Mr. Ricafort said.  

Despite the tariff threats, he said second-quarter growth could still reach 6%, driven by election spending. 

Ms. Tan anticipates an increase in government spending ahead of the midterm elections on May 12. 

Mr. Peña-Reyes said he sees the economy expanding by 5.9% in the second quarter, as well as the full year. 

Mr. Balisacan has said it may be too early to revise the full-year growth targets in the Development Budget Coordination Committee’s meeting in May. 

However, he said the upper end of the 6-8% target may be unrealistic to hit amid global uncertainty over the US tariff policy.  – Aubrey Rose A. Inosante, Reporter