Economic growth slows to 6.4% in Q1

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Metro Manila (CNN Philippines, May 18) — The economy got off to a weak start this year, missing the boost provided by the 2016 national elections.

The gross domestic product (GDP) - the broadest measure of the economy - grew by 6.4% in the first quarter, down from 6.9% the year prior, the Philippine Statistics Authority said in a statement on Thursday. It likewise missed the government forecast of 7%.

The services and industry sectors - the major contributors to the economy - both slowed in the first quarter. Agriculture, on the other hand, was able to grow 4.9%, turning around a 4.3% decline last year.

There was much less spending as well. Household consumption grew just 5.7% in the January-March period, down from 7.1% a year ago. Government spending had a much sharper drop, growing just 0.2% from 11.8%.

"Growth last year was high due to election spending, the impact of which has already dissipated," Socioeconomic Planning Secretary Ernesto Pernia said in a briefing.

"Also, the changing of the guards of the administration and reorientation of programs typically take some time to settle, and this slowed government spending for the quarter."

Nevertheless, the Philippines is still one of the best-performing emerging economies in the region, Pernia noted. Its GDP growth is second only to China and surpasses that of Indonesia, Thailand and Vietnam.

Economic managers are confident the economy can catch up in the coming quarters to hit their target of 6.5-7.5% growth by the yearend.

For the rest of the year, the government will focus on rolling out its infrastructure projects, as repeatedly promised.

"With the steady unfolding of the Build Build Build program in the coming months, we expect construction activities and public spending to pick up sharply," Pernia said.

It will also monitor the possible onslaught of El Nino, with the country in the middle of the summer months. Pernia said the government is ready to offer production support, distribute seeds and import food if necessary.

Lastly, economic managers will work to keep consumer prices low and stable, in a bid to spur more consumption.

For its part, the central bank vowed it would be watchful of inflation. Bangko Sentral Governor Amando Tetangco, Jr. said in a text message: "As in the past, we will continue to calibrate our policy levers so these provide the appropriate incentive structure for businesses to plan with risk-adjusted returns in mind."