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Manila Bulletin devider Business devider The Economy devider Gov't spending supports Philippine Q1 growth as consumers save up—Deutsche Bank Research

Gov't spending supports Philippine Q1 growth as consumers save up—Deutsche Bank Research

Published May 6, 2025 11:52 am

At A Glance

  • Robust government spending ahead of the May 12 elections likely sped up economic growth in the first quarter, despite private consumption largely being in wait-and-see mode as Filipinos save up, according to the research arm of global financial giant Deutsche Bank.

Robust government spending ahead of the May 12 elections likely sped up economic growth in the first quarter, despite private consumption largely being in wait-and-see mode as Filipinos save up, according to the research arm of global financial giant Deutsche Bank.

In a May 3 report received by Manila Bulletin on Tuesday, May 6, Deutsche Bank Research forecast the Philippines' first-quarter gross domestic product (GDP) growth as "remaining relatively stable" and inching up to 5.4 percent from the previous quarter's 5.3 percent.

Its Philippine growth projection was nonetheless below the consensus estimate of a 5.7-percent end-March expansion, as well as the government's more ambitious full-year goal of six to eight percent.

The government will report on first-quarter GDP performance on Thursday, May 8.

While expenditures on public goods and services were seen to be "stronger" at the start of the year to avoid the election ban, Deutsche Bank Research said that "the political cycle's impact on private consumption may not be notable," referring to next week's midterm polls.

According to Deutsche Bank Research, Filipino households have been "[exercising] restraint amid highly elevated economic uncertainty—rebuilding their savings" that dried up during the harder times wrought by the Covid-19 pandemic.

The report noted that the Bangko Sentral ng Pilipinas' (BSP) latest Consumer Expectations Survey (CES), conducted in the fourth quarter of 2024, showed that the share of surveyed households with savings dropped to 25.6 percent from 29 percent in the third quarter of the same year.

Deutsche Bank Research recalled that back in the fourth quarter of 2019—pre-pandemic—as much as 36.3 percent of Filipino households had savings.

It nonetheless cited the boost from slower inflation, which its report had projected to have eased to 1.7 percent last month amid "falling oil and food prices, coupled with muted demand-pull price pressures."

Actual April headline inflation, reported by the Philippine Statistics Authority (PSA) on Tuesday, showed a fall to 1.4 percent—the lowest since November 2019.

The Deutsche Bank Research report also noted that manufacturing in the Philippines bucked the regional contractionary trend in April, right after United States (US) President Donald Trump announced a tariff spree against trading partners, including a 17-percent reciprocal tariff on American imports from its former lone colony in Asia.

Related Tags

Deutsche Bank Research gross domestic product (GDP) growth Bangko Sentral ng Pilipinas (BSP) Consumer Expectations Survey (CES) inflation rate Philippine Statistics Authority (PSA) Donald Trump reciprocal tariff Covid-19 pandemic
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