MANILA (UPDATE 2) — The Philippine economy grew 5.4 percent in the first three months of the year, the Philippine Statistics Authority said Thursday.

This was faster than the 5.3 percent GDP growth seen in the fourth quarter of 2024. 

Economic managers expect the Philippine economy growing at least 6 percent in 2025. However, some economists have said that the trade war set off by the United States has heightened uncertainty in the global economy which may impact the Philippines. 

PSA Undersecretary and National Statistician Dennis Mapa said gross domestic product grew 1.2 percent on a quarter-on-quarter basis in the first three months of 2025.

"Manufacturing; Wholesale and retail trade; repair of motor vehicles and motorcycles; and Construction were the top contributors to the quarter-on-quarter growth," the PSA said. This was followed by Agriculture, forestry, and fishing; and Services, which grew quarter-on-quarter by 1.8 percent and 0.8 percent, respectively, the PSA said.

Undersecretary Rosemarie Edillon of the Department of Economy, Planning and Development (DEPDev) said the first quarter print "shows signs of steady growth."

"This is actually faster than the growth that we saw during the fourth quarter of 2024, which is at 5.3 percent, although slower than the 5.9 percent that we saw during the same period last year. So while this pace falls short of our initial expectations, it reflects developments from the broader global context of temperate economic activity amid persistent uncertainties," Edillon said. 

She noted that the Philippines ranks second among its Asian peers that have already released their first quarter figures: Vietnam grew 6.9 percent, China 5.4 percent, Indonesia grew 4.9 percent, Malaysia grew 4.4 percent, while Thailand is forecasted to grow 2.8 percent. 

"And this performance underscores the relative resilience of our economy in the face of global volatility," Edillon said. 

The government also needs to strengthen trade ties with other blocs, she said. 

"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." 

She said the country needs to grow 6.2 percent for the rest of the year to meet the lower-end 6 percent growth target set by economic managers. 

Edillon said the first quarter GDP print is “not quite a disappointment” given the global economic uncertainty. 

“But there are things that also provide us optimism, for instance  the investments in durable equipment, which also makes up a huge bulk of the imports, are really on capital equipment,” she noted. 

The official also said she expects both government and household spending to contribute to GDP growth this year. 

“Actually for the entire year of 2025, there will still be substantial growth from government final consumption expenditure,” she said. 

“We are really very confident about growth in, still there’s the growth in public construction, and also the [public-private partnerships],” she added. 

Edillon also noted that preparations for the Philippines’ hosting of the Association of Southeast Asian Nations (ASEAN) Summit in 2026 can drive growth this year. 

“I think preparations [are] already being undertaken this year, also with respect to infrastructure,” she said. 

Household spending, meanwhile, is expected to increase as inflation and interest rates ease, Edillon said. The official also said the Philippines needs to diversify its economy when asked if the country is already in a middle-income trap. 

“Our challenge is really to get out of this middle income trap. And to be able to get out of this middle income trap, hopefully very quickly, it’s really about being able to diversify our economy,” she said. 

“So it has to do with economic diversification, has to do with more innovation, has to do with technology adoption.  With technology adoption you can have greater labor productivity.”