The Philippine economy showed modest improvement in the second quarter of 2025, driven by solid performances in agriculture, services, and industry, although growth remained slower compared to the same period last year, according to the Philippine Statistics Authority (PSA).
Gross domestic product (GDP) rose by 5.5% from April to June, slightly faster than the 5.4% recorded in the first quarter. PSA chief Claire Dennis Mapa announced during a press conference in Quezon City that this marks the fastest quarterly growth in the past year — yet still a step down from the 6.5% expansion in the second quarter of 2024.
All major sectors saw positive annual growth: agriculture, forestry, and fishing jumped 7.0%, industry rose 2.1%, and services expanded by 6.9%.
Among the top contributors were wholesale and retail trade; repair of motor vehicles and motorcycles (5.1% growth); public administration and defense including compulsory social security (12.8%); and financial and insurance activities (5.6%).
Investment activity also gained momentum, with fixed capital formation growing 2.6%. Private construction surged by 11.2%, while spending on durable equipment increased 10.6%.
Government spending, however, slowed to 8.7% from 18.7% in the first quarter, a dip attributed to the election spending ban. Despite the slowdown, Secretary Arsenio Balisacan of the Department of Economy, Planning, and Development expressed optimism that public expenditure will pick up in the latter half of the year.
“We expect to maintain that momentum in the spending side… you should see improvements in the construction, public construction spending,” Balisacan said during the economic briefing.
Interestingly, the elections may have curbed state spending, but they fueled household consumption, which rose by 9.5% — a sharp increase from 5.29% in Q1 and 5.4% in the same period last year.
External trade also provided a lift. Exports climbed 4.4%, led by a 13.6% rise in merchandise shipments, with semiconductors alone growing 10.8%. Imports, meanwhile, posted a 2.9% increase. Services exports, however, declined by 4.2%, which Balisacan attributed to global uncertainties.
“Possibly following the overall state of the global economy in the recent months, we saw deceleration,” he said, pointing to lingering instability in global trade.
With a full-year growth target of 5.5% to 6.5%, Balisacan said the lower end is within reach. “What we need to achieve for the rest of the year is 5.6% to hit the lower limit… that’s already just around the corner,” he said, adding that cooling inflation and lower policy rates could help drive momentum.
Inflation dropped to 0.9% in July — the slowest pace in nearly six years — largely due to softer increases in housing and utility costs. Economists say this development could give the Bangko Sentral ng Pilipinas more room to cut policy rates further. BSP Governor Eli Remolona Jr. has already hinted at two additional cuts this year, after a 25-basis-point reduction in June.
To reach the 6.5% upper target, the economy must grow by 7.5% in the second half — a stretch, but not out of the question.
“7.5% is high, but it’s not impossible,” Balisacan said, citing growing consumer and investor confidence as key drivers. “If we see continuing improvement in… consumption and investment, and the services, we should see greater growth.”
