People wait for jeepneys along a road in Quezon City, Metro Manila, the Philippines, on Monday, May 5, 2025. The Philippines is scheduled to announce its gross domestic product (GDP) figures on May 8. Photographer: Geric Cruz/Bloomberg
MANILA: The softer-than-expected economic growth in the first quarter was not entirely a letdown, but it may be the best kind of expansion that the Philippines could muster this year amid the tariff-induced global uncertainty that’s hurting business sentiment.
Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said the US trade war would continue to weigh on companies’ expansion plans, which could prevent investments from making a bigger contribution to gross domestic product (GDP).
“The real test for fixed investment is now here, with the postpandemic catch-up finally over,” Chanco said in a commentary.
“We continue to doubt that this component will be able to improve quickly on its already-soft 2024 outturn of 6.3%, especially when adding into the mix the prevailing uncertainty from the US’ trade war,” he added.
At the same time, Chanco said the stellar growth of government spending early this year would be difficult to sustain, citing the need to cut the budget deficit back to pre-pandemic level.
For now, Chanco maintained his full-year GDP growth projection of 5.3%.
If realiSed, it would mark a slowdown from the 5.7% expansion in 2024.
“Looking ahead, we reckon the first quarter will be as good as it gets for the Philippines this year,” he said.
“Crucially, the economy enjoyed a broad-based improvement in activity – as we expected – which has really just been masked by a big bounce in imports, a positive sign in and of itself,” he added.
Latest data showed GDP had expanded by 5.4% year-on-year in the first three months.
That was slightly faster than the 5.3% growth in the preceding quarter, but weaker than the 5.9% clip recorded in the same period last year.
At the same time, the figure fell short of the 5.9% median estimate of 12 economists polled by the Inquirer.
Analysts said the spectre of global trade war bruised business confidence.
Gross capital formation – the investment component of the GDP – grew by 4% in the three months ending in March, slowing down from 5.5% in the preceding quarter. — Philippine Daily Inquirer/ANN
