GDP Update: Growth picks up pace

The Philippine economy grew at a quicker pace in the second quarter (Q2) of the year, supported by domestic demand and reflected across all main sectors.

Gross domestic product (GDP) expanded by 5.5% year-on-year (YoY) in Q2, slightly faster than the 5.4% YoY growth in Q1.

Slow inflation opens the door for monetary authorities to continue providing support to the economy.

Key points

• Domestic demand supported growth in Q2, led by household consumption. External demand, meanwhile, also slightly supported growth as trade deficit narrowed for the first time since Q1 2024.
• On the sectoral side, services remained the main contributor to growth, led by an expansion in wholesale and retail services. The agricultural sector also expanded for the second consecutive quarter post-El Nino, after three periods of contraction in 2024.

What’s next?

• A muted inflation environment so far strengthens the case for continued policy easing by the Bangko Sentral ng Pilipinas (BSP) to further boost GDP growth.
• Metrobank Research forecasts that the BSP will reduce its policy rate by 25 bps at the next Monetary Board meeting (August 28), to be followed by another 25-bp cut toward the end of the year. This would bring the BSP’s reverse repurchase rate (RRP) to 4.75% by end-2025.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)   

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ECONOMIC UPDATES

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Agri boon fuels slightly quicker GDP in Q2

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