Philippine economic growth quickens to 8.3% in Q1

Philippine economic growth accelerated in the first three months of the year, data released by the Philippine Statistics Authority (PSA) on Thursday showed.

The gross domestic product (GDP) grew by 8.3% in the first quarter of the year, which compares with the 7.8% in the fourth quarter of 2021 and the -3.8% in the same quarter last year.

The main contributors were manufacturing, which grew by 10.1%; wholesale and retail trade and repaid or motor vehicles and motorcycles by 7.3%; and transportation and storage by 26.5%.

In terms of major economic sectors, agriculture, forestry, and fishing expanded by 0.2%; industry by 10.4%; and services by 8.6%.

Household spending increased by 10.1%, while government spending by 3.6%.

Net primary income from the rest of the world surged by 103.2%, bringing the gross national income 10.7% higher.

“I think that the big driver of this growth is our full reopening of our economy. I think that is the single most important driver,” Socioeconomic Planning Secretary Karl Kendrick Chua said in a briefing.

Metro Manila and seven other provinces were placed under looser Alert Level 2 starting February 1, 2022, after being under Alert Level 3 for most of January.

Chua noted that the latest Philippine economic growth is the fastest in East Asia and is now above pre-pandemic levels.

Data show that the nominal GDP at current prices stood at P4.9 trillion in the first quarter, higher than the P4.43 trillion recorded in the same quarter of 2019.

Real GDP also climbed to P4.618 trillion, higher than the P4.46 trillion in the first quarter of 2019.

“The pandemic may have pushed back our timetable, but not our targets and our resolve,” Chua said.

Chua said that the National Economic and Development Authority (NEDA) will recommend that the inter-agency Development Budget Coordination Committee (DBCC) keep the 7% to 9% target range for the year.

He also said that NEDA will first have to look into the data to figure out the contribution of the base effect and election spending.

“In the past, the impact of election spending that I have seen in my previous studies do not exceed 1 percentage points,” he explained.

In Malacañang, acting presidential spokesperson Martin Andanar  attributed the 8.3% GDP growth to the “effective approach” of the government in terms of handling the pandemic and joblessness.

“This is a testament of our effective approach of the administration in ensuring our people's safety from COVID-19, while giving the public the opportunities to alleviate hunger and joblessness,” Andanar said at a briefing.

Andanar said the next administration should only have to continue the measures of the Duterte administration's finance or economic cluster team to sustain the momentum.

Citing the Bangko Sentral ng Pilipinas, Andanar said that foreign direct investment (FDI) net inflows jumped by 46.3% year-on-year in February. 

For his part, BSP Governor Benjamin Diokno welcomed the latest growth as he noted that the central bank will continue to address non-monetary measures to address supply-side pressures such as the price hikes of specific imported food items.

“Moving forward, the BSP will continue to work with the national government to keep the economy on a robust growth trajectory and to address headwinds such as price pressures,” he told reporters in a mobile message.

“For our part, 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."

The Monetary Board of the BSP in its last policy meeting decided to keep rates at record lows for the 11th straight meeting—the overnight reverse repurchase facility at 2.0%, overnight deposit facility at 1.5%, and overnight lending facility at 2.5%.

This comes as inflation surged to 4.9% in April, the fastest in over three years.

Think tank IBON Foundation, meanwhile, said that the latest growth was driven mainly by base effects and election-related spending over the reopening of the economy.

“[T]his will likely be the last relatively high growth reported, and the next administration will have to make do with weaker growth performance,” it said in a separate statement.

“The economy has probably already exhausted economic growth from opening up… The coming quarter will likely show how mismanaged pandemic response has shifted the country to a much lower growth trajectory."

IBON said the upcoming economic team should look into moving more into domestic agriculture, local industry, and ordinary Filipinos rather than big businesses and foreign investment.

“Unfortunately, this seems unlikely and we will probably just see disappointing continuity and more of the same under the next administration,” it said. — with Joviland Rita/AOL/RSJ/KBK/VBL, GMA News

Erratum: GMA News Online regrets the error made in the first version of this article saying that Philippine economic growth slowed to 8.3%. We have corrected the article. We apologize to our readers for the error.