Phl growth slows to 6.4% in Q1

WITH the effects of election spending now hardly being felt, the Philippine economic growth in the first quarter slowed down to 6.4 percent, from 6.9 percent for the same period in 2016 and 6.6 percent the quarter before that.

As this developed, the World Bank has downscaled its growth projections for the country this year to 6.8 percent. WB however retained its growth projection of 6.9 percent for 2018. 

 

Still Strong

The revised 2017 projection considers recent economic trends and compares with the 6.9 percent growth forecast in April, the multilateral lending institution said.

The weak areas were household spending and capital formation, which slackened to 5.7 percent as of end-March and 7.9 percent from 31.5 percent, respectively, in the first three months of 2017.

Still the Duterte administration said the Philippines remains one of the strongest performers among emerging economies in Asia as it overtook Vietnam and Indonesia, which grew by 5.1 percent and Thailand.

“We are only second to China’s growth of 6.9 percent while India’s number hasn’t come out yet,” said Socioeconomic Planning Secretary Ernesto Pernia.

Even with the slowdown in household spending, he said, the economy remains strong. 

 

Export Growth 

And with global demand improving, exports grew by 22.3 percent, the fastest since the third quarter of 2010, and services exports grew by 14.3 percent in the first quarter.

On the supply side, agriculture made a great comeback with a 4.9 percent growth rate after several quarters of negative growth, Pernia noted.

The services sector remains the main growth driver, expanding by 6.8 percent, while the industry sector managed to grow at a respectable pace of 6.1 percent on robust factory output despite the slowdown in construction and utilities, and declines in mining and quarrying, he added.

 

Growth momentum

Pernia said the domestic economy is on track to keep its growth momentum with external trade on a path of recovery and the private sector staying optimistic about the Philippine growth story, the Manila Times reported.

The government has been busy laying down a strong foundation for sustainable and equitable growth with an ambitious infrastructure program among the many reforms and programs under the Philippine Development Plan 2017-2022.

“It is important to ensure that government spending for both consumption and investment remains within the fiscal program, which is critical to sustain the growth momentum,” he said.

With the steady unfolding of the Build, Build, Build program in the coming months, the government expects construction activities and public spending to pick up sharply, consistent with the government’s aim to spend 5.3 percent of GDP this year for infrastructure and up to 7.4 percent by 2022, he stressed.

 

Risks

Pernia said the government is closely watching external risks that may include market volatility from US interest rate normalization, geopolitical tensions in various regions, and the possible rise of protectionist sentiments in Western countries.

“We also need to ensure that inflation will remain modest for the next three quarters to keep demand strong. Our inflation in the first quarter at 3.2 percent was pretty high compared with first quarter of last year,” he said.

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 Association of Southeast Asian Nations neighbors, the Cabinet official noted.

 

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