Q1 growth of 5.7% short of expectations

(UPDATE) THE economy grew 5.7 percent in the first quarter this year despite strong domestic and international headwinds, the Philippine Statistics Authority (PSA) reported on May 9.

The result — up from 5.5 percent in the last three months — was lower than the 6.4 percent recorded in the previous year and the 5.9 percent median projection by economists in a The Manila Times poll.

Despite the slowdown, Socioeconomic Planning Secretary Arsenio Balisacan said the economy “continues to demonstrate remarkable resilience and growth.”

“From the start of the year, we have been experiencing several shocks, the major ones being the long period of the heat wave, and related to that, the El Niño, and geopolitical tensions,” Balisacan said.

“Our first quarter economic performance is a testament to our people’s and industries’ resilience,” he added.

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Drivers of growth

The main contributors to the growth, the PSA said, were financial and insurance activities (10.0 percent), wholesale and retail trade, repair of motor vehicles and motorcycles (6.4 percent) and manufacturing (4.5 percent).

All major economic sectors posted expansions during the period, with agriculture, forestry and fishing, and industry growing 0.4 percent, 5.1 percent, and 6.9 percent, respectively.

Balisacan said their optimism is fueled by the notable turnaround in the growth of the net exports sector, which surged 9.5 percent.

This growth sharply contrasts with the contraction of -11.8 percent experienced in the same period last year and -14.9 percent in the fourth quarter of 2023.

During the first three months of 2024, household final consumption expenditure increased by 4.6 percent.

Likewise, government final consumption expenditure, gross capital formation, exports of goods and services, and imports of goods and services grew by 1.7 percent, 1.3 percent, 7.5 percent, and 2.3 percent.

During the same period, gross national income expanded by 9.7 percent, and net primary income from the rest of the world surged by 57.0 percent.

PH on track to achieve target

Balisacan said the first quarter performance solidifies the country’s status as a key player among Asia’s emerging economies.

He noted that the country’s growth rate is comparable to Vietnam’s, outpacing major economies like China at 5.3 percent, Indonesia at 5.1 percent, and Malaysia at 3.9 percent, though it lags behind India’s projected growth rate of 6.2 percent.

“Despite various risks and challenges, the economic outlook for the Philippines in the near and medium term remains bright,” Balisacan said.

“With hard work and the right policies in place, we are confident that we will achieve our growth target of 6.0 to 7.0 percent this year,” he added.

Balisacan emphasized the importance of ensuring food security, given extreme weather conditions and climate change. He said the government will increase investments in research and innovation to help agriculture and food systems adapt to these challenges.

He also highlighted how proactive measures have significantly reduced the impact of El Niño on the agriculture sector. However, much more needs to be done, including adjusting planting schedules.

Additionally, the government is committed to using strategic trade policies to support domestic production and empower consumers.

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