Philippine economic growth picks up

The Philippine economy is showing signs of renewed momentum, with second-quarter growth likely accelerating compared to the first three months of the year, according to a leading think tank.

In its latest economic bulletin, the University of Asia and the Pacific (UA&P) projected a 5.6 percent gross domestic product (GDP) expansion in the second quarter—up from the 5.4 percent recorded in Q1—citing increased employment and a steep drop in inflation.

“Economic indicators flashed slightly more positive signals,” wrote UA&P senior economist Victor Abola and research assistant Marco Antonio Agonia in the June edition of The Market Call. They pointed to improved job numbers in April and the lowest inflation rate in over five years as key contributors to the expected uptick.

April saw the creation of over half a million new jobs, while inflation dropped to just 1.3 percent in May—the slowest pace since November 2019. These developments are expected to boost consumer spending and help offset lingering concerns over global market volatility and currency depreciation.

The analysts noted that while the government’s full-year growth target of 6 to 8 percent may now be ambitious, the economy’s underlying strength is intact. Continued progress in job generation, easing prices, and improving government spending are helping to sustain expansion.

“The below-target inflation rate and more jobs in April should translate into stronger consumer spending in the second quarter,” Abola and Agonia wrote, acknowledging that challenges such as global tensions and foreign exchange volatility persist.

Meanwhile, the peso has weakened slightly against the US dollar amid geopolitical tensions and diverging interest rate policies between the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve. Despite this, the exchange rate remains relatively stable when compared to broader regional currency trends.

Government officials continue to recalibrate macroeconomic targets in response to global developments. The Development Budget Coordination Committee (DBCC) is expected to release revised figures soon.

For now, analysts remain cautiously optimistic. With fundamentals such as inflation control, job growth, and consumer resilience in place, the second quarter could mark a turning point for the Philippine economy in 2025.