The Philippine economy reported a growth of 5.4 percent for the first quarter of 2025, a slight increase from the 5.3 percent recorded in the previous quarter but significantly lower than the 5.9 percent growth observed in the same period in 2024. This growth figure has raised concerns about the government's ambitious medium-term gross domestic product (GDP) growth target of six percent to eight percent, set for the years 2025 to 2028.

Arsenio M. Balisacan, Secretary of the Department of Economy, Planning, and Development (DEPDev), emphasized the need for ambition, arguing that the pursuit of this target should not be abandoned prematurely.

"It’s too early to give up six to eight percent for the medium term," he stated during a press event on May 14. Balisacan warned that failure to strive for higher growth could leave the Philippines lagging behind its regional neighbors.

The disappointing performance in Q1 2025 was largely attributed to a significant widening of the trade deficit, which increased by nearly 20 percent.

Balisacan indicated that net exports, which constitute about 10 to 11 percent of the GDP, negatively impacted overall growth by approximately 2.1 percentage points.

He calculated that if exports and imports had increased in tandem, the GDP growth could have reached 6.2 percent.

In order to meet at least the lower threshold of the six percent target for the year, the economy must maintain a quarterly growth rate of 6.2 percent for the remainder of 2025, according to DEPDev projections.

Despite the global uncertainties affecting economic conditions, Balisacan expressed optimism about the Philippines reaching its growth objectives over the next three years, especially when compared to neighboring nations like Vietnam, which aims for an ambitious growth target of eight to ten percent as it strives to become an advanced economy by mid-century.

Balisacan acknowledged the direct challenges facing the economy, such as limited fiscal space resulting from previous Covid-19 policy responses.

He noted, however, that a strategic partnership with Congress is vital to ensure that the approved budget prioritizes impactful initiatives aimed at enhancing productivity, fostering inclusive growth, and reducing poverty while improving the quality of employment.

To address the notable drop in net exports, the Secretary highlighted the necessity of enhancing export competitiveness and exploring new markets.

He urged the need for strong negotiations and diversification of both exports and markets to mitigate vulnerabilities associated with dependence on specific trading partners.

Balisacan pointed out that ongoing uncertainties in the global trade environment could dampen investor confidence and delay decisive investments in the Philippines.