The economy expanded by a higher-than-expected 5.5 percent in the second quarter of 2025, driven by spending in the midterm elections last May that lifted household and government consumption.

The Philippines outperformed several of its regional peers and solidified its position as one of Asia’s fastest-growing economies amid persistent global headwinds.

Low inflation, at a favorable 0.9 percent in July from June’s 1.4 percent, buoyed consumer spending.

The relatively strong growth during the period came as uncertainty over “reciprocal” tariffs imposed by US President Donald Trump continued to cast a pall over the global outlook.

The second-quarter growth results, released by the Philippine Statistics Authority on Thursday, were slightly above the 5.4-percent rise recorded in the first quarter, but slower than the 6.5-percent tallied in the same period a year ago.

The latest GDP result comes months after the administration of President Ferdinand Marcos Jr. revised down its growth target to 5.5 to 6.5 percent this year, from its previous forecast of 6 to 8 percent.

The downgrade stemmed from concerns that external headwinds, including trade uncertainties and tensions in the Middle East, would affect the country’s performance.

The robust performance was attributed to resilient domestic demand, increased household consumption, sustained government spending, and growing investor confidence — key indicators that collectively lifted the nation’s gross domestic product (GDP) for the period of April to June.

Region’s fastest

Finance Secretary Ralph Recto welcomed the news, pointing out that the country’s second-quarter growth outpaced China (5.2 percent), Indonesia (5.1 percent), Malaysia (4.5 percent), and Singapore (4.3 percent).

“The back-to-back good news — the low inflation rate, vibrant labor market, and strong GDP growth — are very encouraging. But as the President said in his SoNA, the true measure of progress is whether our people can feel it. That’s why we will continue working until this prosperity is not just seen in the data, but is felt at the dinner table, in people’s pockets, in the future of every Filipino family,” Recto said.

In a press briefing, Department of Economy, Planning and Development (DEPDev) Secretary Arsenio M. Balisacan said the consistent figures demonstrate the strength of the country’s economic fundamentals.

He said the administration’s economic groundwork has played a key role in sustaining growth, citing President Ferdinand Marcos Jr.’s statement during his State of the Nation Address last month that “economic growth must translate into genuine improvements in the lives of ordinary Filipinos.”

“Our economy is focused on enabling more Filipinos to participate fully and proactively in our economy by making essential goods more affordable, supporting the creation of high-quality jobs, and keeping our growth running efficiently,” he said.

Household spending rose by 5.5 percent, driven by increased expenditure on transport, education, restaurants, and hotel services, signaling improved consumer confidence and greater willingness to spend beyond basic needs.

This momentum was supported by a continued slowdown in inflation, which averaged 1.8 percent in the first half of 2025, falling below the Bangko Sentral ng Pilipinas’ target range of 2 to 4 percent for the year.

At the same time, the labor market remained vibrant, with a record-high 52.4-million Filipinos employed as of June. This reflected a combination of an expanding workforce and improving jobs quality, as underemployment and unemployment rates continued to trend downward.

Government spending also accelerated, posting an 8.7-percent increase in the second quarter. Much of this expenditure went to education, healthcare, social protection, and infrastructure — areas the administration deems vital to inclusive growth.

Private sector activity likewise showed strength. Fixed capital formation expanded by 2.6 percent, buoyed by an 11.2-percent jump in private construction and a 10.6-percent increase in durable equipment investment — clear signs of investor confidence and ongoing business expansion.

Exports exceeded expectations with 4.4-percent growth, driven by a 13.6-percent surge in merchandise exports. The continued global demand for Philippine semiconductors played a major role in the export recovery, despite the still challenging global trade environment. Imports, meanwhile, grew at a slower pace of 2.9 percent.

On the supply side, agriculture rebounded by 7.0 percent during the quarter, supported by increased output in sugarcane, corn, and palay. The services sector remained a major growth contributor with a 6.9-percent expansion, propelled by real estate, professional services, trade, and accommodation and food services.

As the administration seeks to translate the economic gains into tangible improvements in the people’s lives, it is doubling down on key priorities: quality education, healthcare access, food security, and investments in digital and physical infrastructure.

To align spending with these goals, President Ferdinand Marcos Jr. has pledged to ensure that the 2026 national budget will reflect government priorities, while underscoring his administration’s commitment to fiscal responsibility, transparency, and anti-corruption.

The government is also accelerating infrastructure development through public-private partnerships (PPP), with three airports slated for privatization this year — moves expected to improve connectivity, stimulate tourism, and spur broader economic growth.

In tandem with infrastructure initiatives, the Department of Tourism has rolled out new travel incentives, including visa-free entry for Indian and Taiwanese tourists. Direct flights between Delhi and Manila are scheduled to begin in October, complemented by a value-added tax refund scheme for foreign travelers.

On the policy front, the administration continues to implement measures to attract and retain investments. Since the passage of the CREATE MORE Act in late 2024, the government has approved 182 projects with a combined investment value of P90.13 billion, generating over 41,000 jobs.

In addition, the newly enacted Capital Markets Efficiency Promotion Act is expected to deepen the capital markets, enhance trading activity, and support long-term economic development by expanding financial access and improving liquidity.