The country’s gross domestic product (GDP) grew by 8.3 percent in the first quarter of 2022, higher than the 7.8 percent growth achieved in the fourth quarter of the previous year, and a significant reversal of the 3.8 percent decline a year ago. According to Socioeconomic Planning Secretary Karl Kendrick T. Chua, the country’s growth rate was the fastest in East Asia. Real GDP also rose to ₱4.618 trillion from ₱4.46 trillion in the first quarter of 2019, thereby surpassing economic output in the pre-pandemic period.
Economic expansion was achieved on all fronts: production, expenditure, investments, and trade. Industry and services led production growth at 10.4 percent and 8.6 percent, respectively. Private consumption went up by 10.1 percent, reversing the negative 4.8 percent year-ago slide. Investments grew by a robust 20 percent after nose-diving by negative 13.9 percent in 2021. Exports and imports grew by 10.3 percent and 15.6 percent, respectively. Only government spending slowed down considerably, from 16.1 percent to 3.1 percent; this was due to the 4.9 slowdown in public construction, on account of the election spending ban. Agriculture stayed in the doldrums, with a minuscule 0.2 percent growth, on account of the combined impact of the African swine fever and continuing high prices of basic food items such as pork, corn, and sugar.
Heaving a collective sigh of relief, the country’s economic managers declared in a joint statement on Thursday, May 12: “We have overcome our country’s greatest economic and health challenges.” On a seasonally adjusted quarter-on-quarter basis, the economy grew by 1.9 percent compared to the fourth quarter of 2021, signaling continued recovery despite the impact of more stringent alert levels due to the Omicron variant in early 2022.
While the first-quarter GDP growth result was close to the upper end of the seven to nine percent growth targeted for this year, Finance Secretary Carlos Dominguez III pointed out: “We need to strengthen our domestic economy against external risks, such as the ongoing Russia-Ukraine war, higher global commodity prices, slowdown in China’s economic activity, and monetary normalization in western countries.”
Heightened risk also appears to be on the radar of institutional observers. Global think tank Fitch Solutions has raised the Philippines Short-Term Political Risk Index Score, while London-based Oxford Economics warned of potential credit downgrades for the country if expansionary deficit spending is pursued by the incoming administration. This prognosis was issued after unofficial results showed former Senator Ferdinand Marcos emerging as the presumptive President with a landslide victory.
As the first-quarter results were being assessed, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno affirmed: “The BSP stands ready to adjust our monetary policy settings, should we see material risk of these supply-side pressures spilling over to the demand side.” His optimism is palpable: “(The) robust growth performance of the economy in the first quarter, which beat analysts’ expectations, along with other favorable macroeconomic indicators, helps fulfill the BSP’s vision of a post-COVID Philippine economy that is stronger, more technologically advanced, more inclusive, and more sustainable.”