The Philippine Statistics Authority reported on Thursday, May 09, that the local economy, as measured by its gross domestic product (GDP), slowed to 5.7 percent in the first quarter of the year.
This growth fell short of the government’s target band of 6.0 percent to 7.0 percent this year and was lower than the 6.4 percent recorded in the same quarter a year ago.
However, this figure is about the same as Vietnam's, surpassing other major economies such as China at 5.3 percent, Indonesia at 5.1 percent, and Malaysia at 3.9 percent, but slower than India's projected growth rate of 6.2 percent.
Moreover, the latest GDP number is faster than the 5.5 percent growth achieved in the fourth quarter of 2023.
“However, we must acknowledge the moderated growth in our domestic demand, which reflected the less favorable business sentiment. Construction slowed down, no doubt affected by prolonged periods of extreme heat,” National Economic and Development Authority Secretary Arsenio M. Balisacan said.
“Household spending also slowed due to elevated prices of major food items and the heat wave. Meanwhile, government spending also slowed down, primarily due to the sliding of a large amount of expenditure to April this year, whereas the government made such spending in March last year,” Balisacan added.
Based on the PSA data, the growth in the first quarter was attributed to the financial and insurance activities which rose by 10.0 percent; wholesale and retail trade; repair of motor vehicles and motorcycles, 6.4 percent; and manufacturing, 4.5 percent.
Agriculture, forestry, and fishing sector also grew by 0.4 percent year-on-year; industry, 5.1 percent; and services, 6.9 percent.
On the demand side, private consumption, which comprises some 74.5 percent of GDP, remained weak with 4.6 percent growth due to elevated inflation and high interest rates, PSA Undersecretary Claire Dennis S. Mapa said.
Government spending grew by 1.7 percent as the gross capital formation rose by 1.3 percent.
The net exports sector, which rebounded to 9.5 percent, contrasts with the contraction experienced in the same period last year at minus 11.8 percent and in the fourth quarter of 2023 at a minimum of 14.9 percent.
“The primary driver of this increase in our merchandise exports was the recovery in exports of electronic products. In contrast, merchandise imports remained muted due to a decline in imports of transport equipment,” Balisacan said.
Despite the lower growth, NEDA affirmed that the government will attain the growth target this year through continuous digitalization and government spending particularly on infrastructure projects.