MANILA, Philippines — The Philippine economy likely recorded strong growth in the first quarter even as the country faced the Omicron surge that led to tightening of mobility curbs.
In its latest Market Call report, First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Capital Markets Research said gross domestic product (GDP) in the January to March period could have grown at a double-digit rate of 10 percent.
“The economy looks poised for another strong GDP growth in the first quarter as business firms’ optimism gained additional ground,” FMIC said.
The GDP is coming from a low base of a 3.8 percent contraction in the same period last year. The government will release the first quarter GDP data on Thursday, May 12.
FMIC said the first quarter performance was driven by the rebound in employment, manufacturing gains, and export growth.
It noted that the economy would likely continue its growth trajectory and reach pre-pandemic levels by the second quarter.
In terms of nominal GDP, the Philippine economy is at P19.387 trillion, up from the 2020 level of P17.94 trillion. Pre-pandemic wise, GDP is just down by about 0.7 percent from the 2019 level of P19.52 trillion.
According to the National Economic and Development Authority, reaching the pre-pandemic levels may happen as early as the first quarter.
“Greater business confidence founded on job growth and intensified election spending should provide the impetus,” FMIC said.
“Business optimism for the second quarter and the next 12 months provide added confidence that the economic recovery has gained traction,” it said.
FMIC maintained that the central bank would only start normalizing its policy rates after the national elections have already had clear results.
This even as the Russia-Ukraine war continues to drive global commodity prices and creeps through domestic inflation.
“We expect a policy rate hike only after a clear outcome in the May elections and first quarter GDP growth hits at least 10 percent year-on-year,” FMIC said.
“Nonetheless, we do expect interest rates to rise more in the bond section due to higher inflation and rate increases abroad. The peso should remain under pressure as the US dollar keeps its safe haven status and interest rates there attracting foreign funds,” it said.