The Philippine economy is enjoying low inflation and accelerated growth amid a manufacturing rebound plus improved consumer spending in the second quarter of 2025, according to global investment banking giant Goldman Sachs.

In an Aug. 1 report obtained by Manila Bulletin, Goldman Sachs Economics Research forecasts the Philippines’ second-quarter gross domestic product (GDP) to have grown by 5.6 percent, faster than the 5.4 percent posted in the first quarter. If Goldman Sachs’ forecast is realized, first-half GDP growth would average 5.5 percent, hitting the lower end of the government’s downgraded full-year target.

The government will report on second-quarter GDP performance on Thursday, Aug. 7.

“High frequency data suggest a rebound in manufacturing production in April and May relative to the first quarter alongside improvement in manufacturing PMI [purchasing managers’ index]. Goods exports volume growth contracted less than goods imports growth, which results in a net boost to the economy,” Goldman Sachs said.

“Meanwhile, consumption indicators were mixed with improvement in consumer confidence amid low inflation, although remittance and passenger vehicle sales growth were slower in the second quarter relative to the previous quarter. Government expenditure growth also slowed in the second quarter after strong spending in the first quarter” ahead of the May midterm elections, it added.

While the year-on-year GDP growth rate in the second quarter is expected to outpace the first quarter’s, Goldman Sachs sees second-quarter output growing by 1.1 percent quarter-on-quarter, a slower pace than end-March’s 1.5-percent expansion from October-to-December 2024 GDP.

In relation to its more bullish growth outlook, Goldman Sachs projected July’s headline consumer price index (CPI) inflation to have slowed to one percent from June’s 1.4 percent.

“On a sequential, seasonally adjusted basis, we expect headline CPI to rise 0.2 percent month-on-month in July (versus 0.2 percent month-on-month in June) mainly due to higher domestic fuel and electricity charges, with a partial offset from lower rice prices,” the investment bank said.

The official July inflation figure will be out on Tuesday, Aug. 5.

In a separate Aug. 1 report, Moody’s Analytics also forecasts quicker second-quarter Philippine growth, coupled with a lower July inflation rate.

“We expect slower annual GDP growth in Indonesia than in the March quarter and the opposite in the Philippines,” where the second-quarter figure likely picked up to 5.6 percent, Moody’s Analytics economist Sarah Tan said.

Moody’s Analytics’ headline inflation forecast for July is 1.3 percent, a bit below the June rate.

Singapore-based DBS Bank Ltd., meanwhile, said in an Aug.  4 report that it expects Philippine inflation to have dropped to 1.1 percent year-on-year last month.

For the entire year, DBS Group Research earlier projected inflation to average 2.6 percent, while GDP growth could hit 5.8 percent in 2025.