By Justine Irish D. Tabile, Senior Reporter

The Philippine Statistics Authority (PSA) announced on Thursday that it maintained the country's first-quarter gross domestic product (GDP) growth rate at 2.8%.

The figure marks one of the slowest quarterly expansions for the Philippines in recent years, a notable pullback for an economy that has ranked among Southeast Asia's fastest-growing. The first-quarter pace also falls well below the government's 3.5%–4.5% full-year growth target, underscoring the urgency of a pickup in subsequent quarters.

Gross national income growth — which captures GDP plus net primary income from the rest of the world — was revised downward to 2.9% from the initially reported 3%. Growth in net primary income from the rest of the world was also lowered to 3.5% from 4.5%.

The PSA additionally revised figures across several national accounts components, particularly on the supply side. Downward adjustments were applied to other services, trimmed to 2.9% from 3.9%; electricity, steam, water, and waste management, reduced to 0.03% from 0.7%; and education, lowered to 5.9% from 6.1%.

Conversely, upward revisions were recorded for manufacturing growth, raised to 0.7% from 0.5%; transportation and storage, increased to 5% from 4.4%; and wholesale and retail trade, including repair of motor vehicles and motorcycles, lifted to 4.7% from 4.6%.

The PSA stated that it revises GDP estimates under an approved policy consistent with international standard practices. The revisions were released ahead of second-quarter GDP data scheduled for Friday, August 7, a release that will be closely watched for signs of whether domestic momentum is recovering after the tepid first quarter.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion noted that the revisions indicate income flows from abroad were weaker than initially estimated, though the adjustments were relatively modest.

"The revision implies that compensation of overseas Filipino workers, investment income, or other primary income receipts from the rest of the world contributed less to overall national income growth than first reported," Mr. Asuncion said in a Viber message.

"That said, the revisions do not materially change the broader narrative. Income from abroad continued to expand even after the adjustment, indicating that external income remained a positive contributor to economic activity," he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort observed that the unchanged 2.8% headline figure masked stronger growth in certain domestic sectors alongside reduced contributions from income earned abroad.

"Domestically, faster growth [was] revised for major economic growth engines such as manufacturing, transportation and trade," he said in a Viber message.

Mr. Ricafort suggested that households and businesses had prioritized essential spending, reduced costs, and brought forward some purchases amid the Middle East conflict and expectations of higher inflation and borrowing costs. These adjustments may have provided additional support to manufacturing and trade, he added.

Mr. Asuncion pointed out that net primary income from abroad could still serve as a buffer against weak domestic growth.

"While external income can cushion households and consumption, sustainable growth ultimately depends on domestic investment, employment generation, and productivity improvements," he said.

Full-Year Target Within Reach

Mr. Asuncion said that achieving the government's 3.5%–4.5% full-year growth target had become more challenging following the weak first-quarter performance, although the lower end remained attainable if growth accelerated during the remainder of the year.

"The areas that would need to rebound most strongly are household consumption and investments. Household spending remains the largest component of GDP, making it a critical source of growth," he said.

"Meanwhile, gross capital formation, which contracted in the first quarter, would need to recover as stronger investment activity tends to generate broader multiplier effects across the economy," he added.

In the first quarter, household final consumption expenditure grew by 3%, decelerating from 5.3% a year earlier and 3.8% in the fourth quarter.

Gross capital formation contracted by 3.3%, reversing the 4.5% growth recorded a year earlier. However, the decline was narrower than the 9.4% contraction seen in the fourth quarter.

"From a sectoral perspective, a stronger performance from industry, particularly manufacturing and construction, would help lift growth momentum. Agriculture, which contracted in the first quarter, also has room to contribute if weather conditions and production trends improve," Mr. Asuncion said.

"While the services sector is likely to remain the principal growth driver, a more balanced recovery that includes investment-led growth and stronger production sectors would improve the prospects of meeting the government's full-year target," he added.