Q1 growth below expectations

Economic growth edged up in the first quarter (Q1), the Philippine Statistics Authority (PSA) reported, but was lower than expected and also fell short of the government's full-year target.

At 5.4 percent, gross domestic product (GDP) growth was slightly higher than the 5.3 percent recorded in the last three months of 2024. It was lower than the 5.9 percent seen a year earlier, however, and missed the 6.0- to 8.0-percent goal for 2025.

Analysts polled by The Manila Times expected a 5.8-percent result.

The slower-than-expected expansion, along with below-target inflation, could prompt the Bangko Sentral ng Pilipinas (BSP) to continue low-ering key interest rates.

ANZ Research, which described first-quarter GDP growth as "lackluster," said the BSP's policy rate could be cut to 5.0 percent by the end of the year.

With the effects of US President Donald Trump's tariff policies still to be fully felt, it reiterated a forecast of full-year GDP growth of just 5.0 percent for the Philippines.

'A measured start'

Socioeconomic Planning Undersecretary Rosemarie Edillon called the first-quarter showing a "measured start" with "many layers."

"While this pace (5.4 percent) falls short of our initial expectations, it reflects developments from the broader global context of tempered economic activity amid persistent uncertainties," she added.

The Philippines remained resilient, Edillon pointed out, with growth second-highest among Asian neighbors that have so far released first-quarter data.

The country grew faster than Indonesia (4.9 percent) and Malaysia (4.4 percent), and likely also outpaced Thailand, which is expected to re-port 2.8-percent growth. It tied with China, and only Vietnam grew faster at 6.9 percent.

Positive results

All major economic sectors posted positive results, the PSA said, with agriculture, in particular, expanding by 2.2 percent from just 0.5 percent a year earlier. Industry and services, however, saw growth ease to 4.5 percent and 6.3 percent, respectively, from 5.2 percent and 7.0 per-cent.

Services accounted for 62.2 percent for first-quarter GDP, up from 61.6 percent a year earlier, while industry saw its share dip to 29.5 per-cent from 29.8 percent. Agriculture contributed the least at 8.3 percent.

"These figures reflect a stable, albeit cautious, expansion across sectors," Edillon said.

On the demand side, household spending growth rose to 5.3 percent from 4.7 percent and government expenditures also surged by 18.7 percent from 2.6 percent in January-March last year.

Gross capital formation also grew by a markedly higher 4.0 percent from 0.8 percent. Exports growth slowed to 6.2 percent from 8.1 per-cent, but imports accelerated to 9.9 percent from 2.2 percent.

External trade, said Edillon, was a "mixed picture" and reflected "business strategies that were employed in anticipation of greater uncertain-ty in global trade."

Domestic demand, meanwhile, was described as a "key pillar of growth"

6.0 percent still achievable

Finance Secretary Ralph Recto, meanwhile, also said that GDP growth highlighted the "continued strength and resilience of the Philippine economy, even amid rising global uncertainties."

"Our growth is strong, inflation continues to ease, private consumption is rising, and our job market remains vibrant. These are clear signals of accelerating domestic demand ahead, which is our strongest shield against external headwinds and trade wars."

He said the government remained confident of achieving 6.0-percent growth in the following quarters on the back of continued fiscal con-solidation, lower inflation and progress in trade negotiations.

Recto noted that revenue collections stayed on track during the quarter and added that April's 1.4-percent inflation — below the BSP's 2.0- to 4.0-percent target — provided more room for further interest rate cuts.

Trade Secretary Cristina Roque said the government was committed to building growth momentum via initiatives such as attracting high-quality investments and empowering the micro, small and medium enterprises that make up the bulk of Philippine businesses.

"We are actively fostering a business-friendly environment that drives innovation, generates quality jobs and enhances the local and global competitiveness of Philippine products and services," she said.

'Numbers to pick up'

Albay 2nd District Rep. Joey Salceda, an economist, said he expected GDP growth to improve in the April-June period despite lingering drag from an election spending ban.

"I expect the numbers to pick up in the second quarter, especially capital formation, as expectations of Trump's tariff regime become more stable," he said.

"Businesses also put some of their plans on hold due to uncertainty over the world trade system."

Salceda said that he would ask President Ferdinand Marcos Jr. to implement measures that would "make exportation easier and cheaper; faster processing times for licenses, permits and rules of origin documents for our trade; and easier availment of existing tax incentives."

Source: Manila Times

Government unveils 10-yr. jobs masterplan

The Philippines government on Monday launched a 10-year employment masterplan, which is targeting to increase the labor force participation rate (LFPR) to 68.2% by 2034.

“This is a very ambitious plan. If you look at the targets, it’s simple, we want to raise our LFPR from 64% to 68%,” Department of Economy, Planning, and Development (DEPDev) Undersecretary Rosemarie G. Edillon told reporters.

“So, this is actually a big ask, especially since by 2035, the majority of the workforce will be coming from Gen Z and Gen Alpha. So, we actually need a big policy reform,” she added.

Launched by the DEPDev, the Department of Trade and Industry (DTI), and the Department of Labor and Employment, the Trabaho Para sa Bayan (TPB) Plan aims to strengthen and future-proof the country’s workforce.

Under the plan, the government set near-term and long-term initiatives aimed at addressing challenges faced by the local labor market, such as rapid digitalization, geopolitical tensions, climate change, and demographic shifts.

Ms. Edillon said that the country’s LFPR is the lowest among the Association of Southeast Asian Nation (ASEAN) countries.

“Taking out the COVID-19 (coronavirus disease 2019) years, our LFPR is about less than 65%, but for the other countries, it is actually in the high 60s. You have Vietnam over there with an LFPR in the high 70s,” she added.

Preliminary data from the Philippine Statistics Authority showed that LFPR in February was estimated at 64.5%. For the first two months, the average LFPR stood at 64.2%.

However, the new jobs masterplan did not indicate any targets on how many jobs will be created until 2034.

“The problem with having a target with respect to jobs is that it’s very difficult, especially since we are moving towards a framework for flexible work arrangements where it would be possible for you to hold more than one job,” said Ms. Edillon.

“We’re also moving towards having a framework for part-time jobs. So, it’s difficult [to see] how it will translate into the number of jobs,” she added.

Labor Secretary Bienvenido E. Laguesma said that there have been previous targets to create a million jobs.

“But this does not ensure there will be enough jobs created for the new entrants (to the labor market),” he said.

“It’s not that simple to say that we want to create one or two million jobs by a certain year. What we want to see is that every Filipino family will have a job,” he added.

The TPB Plan also set a target of decreasing the unemployment rate to 3% by 2034 from 3.8% in 2024 and the underemployment rate to 7-9% from 13.3% last year.

In addition, the masterplan also aims to increase the female LFPR to 59% by 2034, which Ms. Edillon said is the lowest in the ASEAN region.

“Ours is about 48.8%, while in Vietnam it is actually 72.5%. So can you just imagine how much more human capital we could add if we could actually increase the LFPR for women?” she added.

The TPB Plan is also targeting to improve the country’s domestic industry diversification and production, as well as export complexity.

Citing the Global Innovation Index, Ms. Edillon said that the two factors measure the level of sophistication of the economy.

“That is actually the goal, that we will be a more competitive country before 2034. So that is actually the goal of the National Innovation Agenda and Strategy Document,” she added.

The TPB Plan outlines priority strategies that aim to address labor demand, supply, and governance, as well as how to future-proof labor demand, supply, and governance.

Strategies to ensure labor demand include expansion of market access, encouraging investments in priority sectors, ensuring ease of doing business, establishment of a dynamic innovation ecosystem, and promotion of technology adoption and enterprise-based education and training.

To improve labor supply, the TPB Plan recognized the need to expand lifelong learning opportunities, upgrade the design of skills training programs, enhance overseas Filipino reintegration programs, and increase program take-up among disadvantaged sectors.

Meanwhile, the TPB also cited 18 policy recommendations, which are seen to create an “inclusive and dynamic labor market environment.”

These policies include the Konektadong Pinoy bill, the Lifelong Learning Development Bill, tax incentives for employees on a work-from-home program, the Freelancers’ Protection Act, and the Amendment of the Maternity Leave Law, among others.

Source: Business World

Philippine annual inflation slows to 1.4% in April

Philippine annual inflation was 1.4% in April, the statistics agency said on Tuesday, below the previous month’s 1.8% rate and the lowest reading since November 2019.

Economists in a Reuters poll had expected annual inflation of 1.8% April, within the central bank’s 1.3% to 2.1% forecast range for the month.

The core inflation rate, which strips out volatile energy and food prices, was 2.2%, the same as in March.

The central bank resumed its easing cycle last month, cutting its key policy rate by 25 basis points. It signaled more reductions to come in “baby steps” to help the economy cope with global challenges. Its next policy meeting is on June 19.

Source: Business World