While the Philippine economy’s growth missed the lower end of the government’s six to eight percent target, the Department of Budget and Management (DBM) said the growth across major sectors further fuels the agency’s confidence in achieving the full-year growth goal.

“The fact that all major economic sectors grew during the first quarter is both notable and promising,” the DBM said in a May 9 statement, which came after the Philippine Statistic Authority (PSA) reported that the country’s gross domestic product (GDP) for the first three months expanded by 5.4 percent.

The first-quarter GDP accelerated slightly faster than the 5.3 percent recorded in the fourth quarter of 2024.

Growth across major sectors “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,” the DBM asserted.

“We remain optimistic that the Philippines will meet its growth target for 2025,” the DBM said, citing the government’s commitment to realizing its medium-term plans.

“We are certain we can sustain our high growth trajectory,” it further said, whose confidence comes from the jump in the government’s capital spending by 8.2 percent. It said that this growth reflects the effective rollout of public infrastructure projects.

Wholesale and retail trade, financial services, and manufacturing were the main accelerators of the first-quarter GDP growth, posting gains of 6.4 percent, 7.2 percent, and 4.1 percent, respectively.

Agriculture, forestry, and fishing rebounded with 2.2 percent growth, while industry and services expanded by 4.5 percent and 6.3 percent year-on-year, respectively.

On the demand side, household spending grew by 5.3 percent, slightly from 4.7 percent in the fourth quarter of 2024.

Investments, or gross capital formation, rose by four percent, while exports of goods and services posted “strong” growth at 6.2 percent and imports increased by 9.9 percent.

However, despite strong export growth, net exports shrank sharply by 19.9 percent, worsening from the previous decline of 1.4 percent.

This was driven by a surge in goods imports, which grew by 9.1 percent (up from 2.4 percent), mainly due to higher purchases of transport equipment, industrial machinery, and electrical machinery.

On the spending side, the DBM said the national budget played a major role in boosting GDP in the first quarter compared to the previous quarter, as shown by the 18.7 percent annual growth in government spending. This marks the highest government spending 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,” it stressed.

“We still expect GDP to accelerate throughout the year as domestic demand strengthens and public investments are sustained,” it added.

This comes despite global uncertainty, as improving consumer spending and sustained government infrastructure spending continue to support domestic growth and cushion the impact of external headwinds, the DBM noted.