Philippines continues to grow among the fastest in ASEAN at 5.4% in first quarter

The Philippine economy continued to grow among the fastest in the ASEAN region at 5.4 percent in the first quarter of 2025, despite rising global volatilities.

The Philippines ranked second among neighboring economies that have so far reported Q1 2025 Gross Domestic Product (GDP) growth, following only Vietnam (7.0%), matching China (5.4%), and outpacing Indonesia (4.9%), Malaysia (4.4%), and Singapore (3.8%).

The latest IMF World Economic Outlook in April 2025 also projected the Philippines to be the fastest-growing economy among ASEAN-5 countries in 2025.

The country’s expansion in Q1 2025 was mainly due to improved government spending and robust private consumption driven by lower inflation.

“Our performance highlights the continued strength and resilience of the Philippine economy, even amid rising global uncertainties. Our growth is strong, inflation continues to ease, private consumption is rising, and our job market remains vibrant. These are clear signals of accelerating domestic demand ahead, which is our strongest shield against external headwinds and trade wars,” Finance Secretary Ralph Recto said.

“Masusi na sinisiyasat ng gobyerno ang mga kailangang reporma para lalo pang mapalago ang ating ekonomiya. Kaya nagpapatupad po tayo ng mga karagdagang reporma tulad ng CREATE MORE para manatiling masigla ang takbo nito at maramdaman ng bawat pamilyang Pilipino ang progreso,” he added.

All key economic sectors posted gains in Q1 2025, showcasing broad-based expansion.

On the supply side, the services sector grew by 6.3%, led by strong activity in human health and social work activities, financial services, and transportation and storage.

The industry sector likewise posted a 4.5% growth, buoyed by improvements in manufacturing, particularly leather goods, tobacco products, and beverages.

On the other hand, the agriculture sector rebounded strongly, growing by 2.2%, a significant acceleration from last year’s 0.5%, mainly due to the higher production of poultry and eggs, sugarcane, and palay.

On the demand side, government consumption grew by double digits to 18.7%. This is faster than the 2.6% growth in the same quarter in 2024 and the highest recorded expansion since the pandemic.

Household consumption also continued to rise by 5.3%, faster than the 4.7% growth in the same period last year. This acceleration was due to increased spending on food and non-alcoholic beverages, miscellaneous goods and services, and housing, water, electricity, gas, and other fuels.

Meanwhile, gross capital formation rose by 4.0% for Q1 2025 from its 0.8% growth in Q1 2024. This was primarily influenced by improved construction activities, durable equipment, and intellectual property products, among others.

While net exports declined by 19.9% due to slower goods exports, this was more than offset by the strength of domestic drivers, demonstrating the economy’s growing resilience and reduced dependence on external demand.

The government is confident in achieving its 6% GDP growth target in the coming quarters, driven by its steady fiscal consolidation, easing inflation, and progress in trade negotiations with key partners, among other initiatives.

The national government’s revenue collections for Q1 2025 remain on track due to the strong performance of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), which drove tax collections to PHP 931.5 billion, a double-digit increase of 13.55% compared to the same period last year.

As inflation continues to cool down, private spending is expected to further improve. The lower-than-expected inflation rate of 1.4% in April 2025 also provides more room for the Bangko Sentral ng Pilipinas (BSP) to further cut policy interest rates to help boost the spending power of Filipinos, drive in more investments, and grow the economy.

Private investments are expected to increase with the implementation of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act.