PH economy posts 5.5% Q2 growth on strong demand

The Philippine economy grew by 5.5% in the second quarter of 2025, outperforming several of its Asian peers, driven by resilient domestic demand, slowing inflation, and a strong labor market, according to the latest government data.

The second-quarter expansion matched household consumption growth at 5.5%, underscoring Filipinos’ increased spending power, particularly in transportation, education, and leisure services such as restaurants and hotels.

The Philippines outpaced China (5.2%), Indonesia (5.1%), Malaysia (4.5%), and Singapore (4.3%), according to comparative regional figures.

Government data also pointed to a strong labor market, with the workforce reaching a record 52.4 million in June—boosted by lower unemployment and underemployment rates.

Private consumption, which accounts for more than 70% of the GDP, was buoyed by a sustained decline in inflation. The headline inflation rate dropped to 1.8% in the first half of 2025, significantly below the government’s target range of 2–4%.

Government spending surged 8.7% year-over-year in Q2, reflecting increased investments in education, healthcare, and social protection.

Fixed capital formation posted a 2.6% rise, mainly driven by an 11.2% increase in private construction and a 10.6% uptick in durable equipment investments, indicating robust business confidence and expanding private sector activity.

Exports rose 4.4%, outpacing import growth of 2.9%, helped by a 13.6% spike in merchandise exports led by continued global demand for Philippine semiconductors.

On the supply side, agriculture rebounded strongly with 7.0% growth, lifted by higher outputs in sugarcane, corn, and palay.

The services sector expanded by 6.9%, driven by professional and business services, real estate, retail trade, and hospitality.

“The back-to-back good news—low inflation rate, vibrant labor market, and strong GDP growth—are very encouraging,” said Finance Secretary Ralph G. Recto in a statement.

“Pero gaya ng sabi ng ating Pangulo sa kanyang SONA, ang tunay na sukatan ng progreso ay kung ramdam ito ng ating mga kababayan. Kaya’t tuloy-tuloy po kami sa aming trabaho hangga’t ang ginhawa ay hindi lang nakikita sa datos, kundi nasa hapag, nasa bulsa, at nasa kinabukasan ng bawat pamilyang Pilipino,” he added.

To sustain this momentum, the government is expediting programs in education, healthcare, and food security, while prioritizing infrastructure through public-private partnerships (PPP).

Three airports are set for privatization this year, expected to enhance connectivity, tourism, and local economies.

The Department of Tourism has introduced visa-free entry for Indian and Taiwanese travelers, with direct Delhi–Manila flights launching in October, alongside the rollout of VAT refunds for foreign tourists.

These measures are aimed at attracting more visitors, boosting spending, and creating new jobs.

The CREATE MORE Act, enacted last year, has led to PHP 90.13 billion in committed investments across 182 approved projects, which are expected to generate 41,719 jobs.

The recently passed Capital Markets Efficiency Promotion Act (CMEPA) is also projected to improve liquidity, increase trading activity, and support long-term capital formation.

Despite persistent global headwinds, analysts say the country’s robust domestic demand, improving investor sentiment, and structural reforms are key strengths in the Philippine economic outlook for the rest of 2025.