STATEMENT ON THE FIRST QUARTER 2025
PERFORMANCE OF THE PHILIPPINE ECONOMY
Arsenio M. Balisacan, PhD
Secretary, Department of Economy, Planning, and Development
9th Floor, PSA Headquarters, East Avenue Office, Quezon City
8 May 2025 | 10:00 AM
(Delivered by Undersecretary Rosemarie G. Edillon)
Friends from the media,
Fellow Filipinos,
Our colleagues from PSA and DEPDev
Ladies and gentlemen,
Good morning, and thank you for joining us.
Please allow me to deliver this statement on behalf of Secretary Balisacan, who is currently with the Philippine delegation attending the Annual Meeting of the Board of Governors of the Asian Development Bank in Milan, Italy.
A Measured Start to the Year
Our concise description of the first quarter economic performance is “a measured start.” There are actually many layers to it and let me help peel it apart.
As already reported, the Philippine economy continues to show signs of steady growth, expanding moderately by 5.4 percent, year on year, in the first quarter of 2025. This growth is slightly faster compared to the 5.3 percent recorded in the previous quarter, though slower than the 5.9 percent expansion observed in the same period last year. While this pace falls short of our initial expectations, it reflects developments from the broader global context of tempered economic activity amid persistent uncertainties.
We ranked second among Asian peers that have already released their Q1 GDP figures—trailing only Vietnam (at 6.9%) and tying with China (at 5.4%) while outpacing Indonesia (at 4.9%), Malaysia (at 4.4%) and Thailand (forecasted at 2.8%). This performance underscores the relative resilience of our economy in the face of global volatility.
Investment and External Trade: A Mixed Picture
Looking at investment and external trade is actually a mixed picture. Fixed capital formation grew faster at 5.9 percent (from 5.0% in Q4 2024) despite the moderation in private construction (6.4% from 9.7%), particularly corporate constructions (1.6% from 5.5%). Investment in the other components, including durable equipment (6.7%), also increased. However, there was a significant drawdown in inventories (-98.0%), coming off a substantial buildup in Q4 2024.
The external sector’s performance reflects business strategies that were employed in anticipation of greater uncertainty in global trade. Thus, even with the strong growth of exports (6.2%from 3.2%), net exports contracted sharply by -19.9 percent from its previous performance of -1.4 percent. The contraction was driven by the rise in goods imports (9.1%, up from 2.4%)—particularly in transport equipment, industrial machinery, and electrical machinery. Services imports also expanded by 12.1 percent, led by transport (15.4%) and travel services (15.0%).
Domestic Demand and Sectoral Resilience
Meanwhile, domestic demand remained a key pillar of growth, expanding by 6.7 percent, up from 5.4 percent in the previous quarter. Easing food inflation supported household final consumption, which grew by 5.3 percent, year on year, faster than the 4.7 percent growth recorded in Q4 2024. Government expenditure growth surged to 18.7 percent from 9.0 percent, reflecting the frontloading of public programs in anticipation also of the election ban.
On the production side, agriculture encouragingly grew by 2.2 percent, industry held steady at 4.5 percent, and services posted a robust growth of 6.3 percent. These figures reflect a stable, albeit cautious, expansion across sectors.
Strategic Imperatives for Sustained Growth
So, what are the strategic imperatives for sustained growth? We should note that amid the ongoing trade war, multilateral institutions such as the International Monetary Fund and the World Bank consistently project the country to remain one of the fastest-growing economies in the region this year. However, this is no reason for complacency.
On the contrary, the first quarter’s performance reinforces the urgency of strategic policymaking, accelerated structural reforms toward economic diversification, and efficient and effective delivery of programs and projects as we near the mid-term of the Marcos Administration.
Managing inflation remains a top priority, and we must ensure that consumer prices remain affordable. The April 2025 inflation rate of 1.4 percent indicates that our interventions are working. For one, the Department of Agriculture is expediting the rollout of African Swine Fever (ASF) vaccines to stabilize pork supply and prevent price spikes. Keeping inflation low through strategic and well-designed supply-side interventions protects our consumers’ purchasing power and provides us ample space for a more accommodative monetary policy that can accelerate growth in consumption and investment in the medium term.
To spur investment growth, we must continue undeterred and stay the course to keep the reform momentum. Even as we continue attracting investors, facilitating investments, and ramping up critical investments in infrastructure, we must hasten the passage of key economic reforms that will strengthen the governance of critical industries (such as water, electricity, and telecommunications), open up the market to greater private-sector participation, demonstrate the government’s commitment to solve bottlenecks to infrastructure development, and build confidence in the country as a strategic and reliable partner in these uncertain times.
Amid the global realignment of trade and investments, the government must accelerate its efforts to expand trade partnerships with key economies such as the European Union, United Arab Emirates, United States, and other potential markets. Such engagements will allow us to diversify our export markets, secure broader market access, ensure our businesses (particularly our micro, small, and medium enterprises) to become part of global value chains, and ensure food availability and affordability.
On the supply side, we can and must support and capitalize on higher value-added activities in the services sector, a sector in which we have found comparative advantage, especially as digital technologies, including artificial intelligence, gain greater momentum for adoption and industries undergo workforce transition periods. Put differently, we must double down on our efforts to upskill, reskill, and, most importantly, invest in the fundamentals of human capital development – health and education. This is the only way we can become and remain competitive in a digitally connected world. The Trabaho Para sa Bayan Plan, released this week, outlines the country’s ten-year strategic master plan for job creation, labor market transformation, and inclusive workforce development.
Tourism under services, for example, holds much-untapped potential. Strengthening international and interregional linkages, improving mobility through infrastructure development, and enhancing internet connectivity can stimulate local investment, adopt labor-augmenting technology, and generate significant economic dividends. Incentivizing lower rates for hotels, accommodation, and transport during off-peak seasons to encourage domestic travel may be considered. We are also looking to enhance our capacity to conduct convergence budgeting by considering the spatial dimension to ensure continued and coordinated investments that can maximize impact of our regional economic strategies.
On the fiscal front, efficient public spending is critical. Catch-up plans for delayed programs must be prioritized post-election, and capacity-building for newly elected officials should be expanded to ensure effective public service delivery. The Economic Team has to strengthen the linkages between planning, resource programming, and budgeting. Furthermore, through stronger monitoring and evaluation, we are enhancing our efforts to “close the loop” to ensure that we direct our scarce resources toward the most impactful and responsive programs and projects.
Economic Transformation Toward the Long-Term Vision
With the Philippines emerging as one of the fastest-growing middle-income economies, we remain optimistic about sustaining and accelerating our progress. This optimism is not passive nor misplaced—it is matched by a commitment to swifter, more decisive, and
dynamic action. The Marcos Administration is working hard to facilitate targeted and strategic investments, enable innovation, proactively monitor risks, deploy targeted social assistance, and preserve our sound macroeconomic fundamentals.
Our long-term goal has always been to achieve resilient, sustained, and inclusive economic growth and development. This means going beyond GDP growth. It demands coordinated and well-targeted investments in human capital, stronger social protection systems, and more responsive governance. It also calls for institutions that are not only efficient but also equitable and future-ready.
As we look to the rest of the year, we are presented with a vital opportunity to translate plans into outcomes that our people feel. This period calls for sustained focus, strategic execution, and collective resolve. We must seize every opportunity to implement reforms, accelerate key programs, and deliver tangible results to meet this year’s targets and progressively realize wins and results toward long-term national progress.
Our commitment remains steadfast. We move forward with purpose and determination, confident in our leaders’ commitment, the strength of our economy, the resilience of our people, and the clarity of our national vision.
We look forward to the rest of the year with optimism and hope for better developments.
Thank you, and good day to all.
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