While the 5.4 percent GDP growth rate for the first quarter of 2025 is at the low end of the 6.0 to 8.0 percent target for the year, the fact that all major economic sectors grew during the first quarter is both notable and promising. This shows progress towards our overriding objective of ensuring that we achieve not only growth but, more importantly, an economic transformation that is inclusive and sustainable.
It is worth noting that Agriculture, Forestry, and Fishing (AFF) saw an impressive rebound with a 2.2 percent growth while Industry and Services posted Year-on-Year (YoY) growths of 4.5 percent and 6.3 percent, respectively. On the demand side, Household Final Consumption Expenditure (HFCE) grew YoY by 5.3 percent in the first quarter of 2025. We also note that investments or gross capital formation grew by 4.0 percent; exports of goods and services grew strongly by 6.2 percent; and imports of goods and services grew by 9.9 percent.
On the expenditure side, the National Budget clearly played a substantial role in the improvement of the GDP in the first quarter of 2025 as compared to the fourth quarter of 2024, as reflected in the high growth of 18.7 percent of Government Final Consumption Expenditure (GFCE) during the quarter. In fact, this is the highest recorded GFCE YoY growth since the second quarter of 2020.
This is why we cannot emphasize enough the important role that government spending performance plays in stimulating the economy, especially amidst the expected slowdown in growth globally due to increasing economic uncertainty, U.S. trade policy changes, slowdown in China’s economy, persistent geopolitical tensions, and fluctuations in commodity prices, among others.
We still expect GDP to accelerate throughout the year as domestic demand strengthens and public investments are sustained. This is even amidst global uncertainty, as domestic growth prospects supported by improving private consumption, including government infrastructure spending, provide a buffer against external headwinds.
Finally, we remain optimistic that the Philippines will meet its growth target for 2025 of 6.0 to 8.0 percent, especially as the government remains strongly committed to achieving our medium-term plans and long-term vision. Given the substantial 8.2 percent YoY growth registered by the capital spending of the government—a testament to the successful implementation of public infrastructure projects—we are certain we can sustain our high growth trajectory.
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