PH economy grows by 5.7% in Q1 2024

Philippine economic growth saw an acceleration in the first quarter of the year from the three months prior but slowed from the same period in the past year, government data released on Thursday showed.

Data from the Philippine Statistics Authority (PSA) showed that the gross domestic product (GDP) grew by 5.7% in the first quarter of the year, which compares with the downward-revised 5.5% in the fourth quarter of 2023 and the 6.4% in January to March of 2023.

The latest reading is lower than the target range of 6.0% to 7.0% set by the inter-agency Development Budget Coordination Committee (DBCC), which was cut short from the prior goal of 6.5% to 7.5% to reflect factors such as global demand, trade growth, oil prices, and inflation trends.

In a briefing, National Statistician Claire Dennis Mapa said the main contributors to growth were financial and insurance activities at 10.0%, wholesale and retail trade and the repair of motor vehicles and motorcycles at 6.4%, and manufacturing at 4.5%.

All major economic sectors posted annual growths — agriculture, forestry, and fishing (AFF) with 0.4%, industry with 0.4%, and services with 6.9%.

Gross national income (GNI) had an annual growth of 9.7%, while the net primary income (NPI) from the rest of the world expanded by 57.0%.

On the demand side, household final consumption expenditure (HFCE) grew by 4.6%, which was the slowest since the third quarter of 2010 amid the country’s elevated inflation and the ongoing El Niño.

"It's a combination of factors of both domestic and external. On the domestic front, it's obviously the elevated inflation and the high interest rates," National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said.

"Note that the high interest rates, particularly the policy rates that were implemented by the (Bangko Sentral ng Pilipinas) were meant to address certain issues," he added.

The central bank in February kept policy rates unchanged at 16-year highs — the target reverse repurchase (RRP) at 6.5%, the overnight deposit rate at 6.0%, and the overnight lending facility rate at 7.0%. These were also maintained in April, with the next policy meeting scheduled on May 16.

Inflation, meanwhile, averaged 3.3% in the first quarter. It has since clocked in at 3.8% in April, marking the fastest in four months.

Balisacan said the elevated heat levels also affected production, especially construction activities and the services sector.

“Construction slowed down, no doubt affected by prolonged periods of extreme heat. Household spending also slowed due to elevated prices of major food items and the heat wave,” Balisacan said.

“People don’t want to go out. It’s so hot, I think that also affected the construction,” he added, with construction growth slowing to 6.8% from 10.1% in the previous quarter, and the 14.7% expansion in the first quarter of 2023.

Government spending grew by 1.7% during the quarter, faster than the 1.0% contraction in the fourth quarter of 2023, but slower than the 6.2%.

Balisacan said, “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.”

Moving forward, Balisacan said the country is still on track to meet its target this year given the efforts put in place by the government to address the El Niño and the high inflation.

"I think that [is] unless we see a reversal in the gains we are making in tempering the inflation, particularly food and energy, I don't see any reason why the second quarter should be any weaker than the first quarter," he said.

With the heat levels remaining elevated through the second quarter, Balisacan said the government is taking climate change seriously as it is now tapping stakeholders to join efforts to adapt especially in vulnerable areas such as agriculture.

"I don't see any more serious efforts now in dealing with climate change than what we are putting today because we see it now, experience it now on almost a daily basis, so we are putting a lot of attention there," he said.  — KBK/VDV, GMA Integrated News