Philippines’ Q1 GDP grows 5.4% y/y, below expectations

[MANILA] The Philippine economy expanded slightly faster in the first quarter even as growth lagged expectations, with household consumption and public spending underpinning momentum as the country faces rising external headwinds from US tariffs.

Gross domestic product rose by an annual 5.4 per cent in the January - March quarter, official data showed on Thursday, slightly ahead of the 5.3 per cent pace in the fourth quarter of 2024. However, the figure fell short of the 5.7 per cent growth projected in a Reuters poll.

“This performance underscores the relative resilience of our economy in the face of global volatility,” Economic Development Undersecretary Rosemarie Edillon said at a press briefing.

On a seasonally adjusted basis, the economy expanded 1.2 per cent quarter-on-quarter, missing economists’ median forecast of 1.6 per cent, according to the Reuters poll.

Growth in the first quarter was largely driven by a surge in public spending, which jumped 18.7 per cent, the fastest pace since the second quarter 2020, as the government front-loaded infrastructure spending before a 45-day ban imposed ahead of the May 12 midterm election takes effect.

Household consumption also picked up, growing 5.3 per cent from 4.7 per cent in the previous quarter, buoyed by easing inflation, which Edillon said may give the Bangko Sentral ng Pilipinas more leeway to loosen monetary policy.

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“There’s really room for more easing,” she said.

Annual inflation in April slowed to its lowest level in over five years to 1.4 per cent, boosting expectations of a policy rate cut at the central bank’s next meeting on June 19. REUTERS