Philippines economy grows 6.4% in first quarter

CEBU, Philippines - The Philippine economy rose 6.4 percent in the first quarter, slower than widely expected but remains one of the fastest among major Asian emerging economies.

"Our first quarter performance bodes well for the economy as it is broadly in line with our target of 6.5-7.5 percent for this year. It is, however, lower than desiredly expected, and for this we were somewhat downcast because we were expecting something like around the midpoint of growth range 6.5-7.5 percent," Economic Planning Secretary Ernesto Pernia said in a statement yesterday.

The first quarter gross domestic product (GDP) — total amount of goods and services produced by a country — growth was lower than the 6.6 percent growth last quarter and 6.8 percent in the same period a year ago.

The Philippines was second to China’s growth of 6.9 percent, and overtook Vietnam and Indonesia which grew by only 5.1 percent, and Thailand by only 3.3 percent.

The Philippines is eyeing a growth of between 6.5-7.5 percent this year.

Pernia said the economy remains strong even with the slowdown in household spending and capital formation.

"With improving global demand, growth in exports was robust. Exports of goods grew by 22.3 percent, the fastest since the third quarter of 2010, and exports of services grew steadily by 14.3 percent in the first quarter of the year," he said.

The agriculture sector rebounded with 4.9 percent growth rate after several quarters of negative growth.

The services sector continued to be the main growth driver as it grew by 6.8 percent.

The 6.1 percent growth in industry also remained respectable with the boost in manufacturing, although tempered by the slowdown in construction and utilities, and decline in mining and quarrying production.

"Moving forward, the domestic economy is poised to maintain its growth momentum with the recovery of external trade and private sector’s steadfast optimism," Pernia said

The government has also been busy laying down a strong foundation for sustainable and equitable growth with an ambitious infrastructure program, among the many reforms and programs contained in the Philippine Development Plan 2017-2022—[among which] are infrastructure spending and as well as other government programs, including investment in human capital," he also added.

He raised the need to ensure that government spending for both consumption and investment remains within the fiscal program, which is critical to sustain the growth momentum.

The government aims to spend 5.3 percent of GDP this year for infrastructure and up to 7.4 percent by 2022.

He further cited the external downside risks that may include market volatility from continuing US interest rate normalization, geopolitical tensions in various regions, and the possible rise of protectionist sentiments in Western countries.

"We also have to remain cautious and stand ready to take measures to counter the effects of El Niño phenomenon, which may include continuous production support, timely importation, and the distribution of seeds," he said.

Inflation should also remain modest for the next three quarters to keep demand strong, as it rose 3.2 percent in the first quarter.

"Likewise, to sustain the growth momentum of exports, it is important to ease government regulation, strengthen market intelligence gathering with the help of the private sector, and maximize trade agreements and economic groupings, especially with our ASEAN neighbors," the economic planning chief said. (FREEMAN)