The economy grew by 6.4 percent in the first quarter of 2023, the slowest recorded in the last seven quarters, according to the Philippine Statistics Authority (PSA).
The first quarter gross domestic product (GDP) growth rate for 2023 is lower than the eight percent increase in the same period last year, and is the slowest recorded since the 12 percent expansion in the second quarter of 2021.
The January to March economic performance, however, is well within the government’s growth target of six to seven for the full-year.
“While this quarter’s growth figure is lower than the eight percent year-on-year growth rate recorded in the first quarter of 2022, we need to exercise caution in interpreting this as a slowdown since the previous year’s growth came from a low base. Rather, the economy is normalizing its previous trend,” National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said in a press conference in Quezon City yesterday.
The NEDA chief said the growth performance is higher than the median estimates of analysts as reported by the media.
Also, among major emerging economies in the region that have released their first quarter 2023 real GDP growth so far, the Philippines grew the fastest, followed by Indonesia (five percent), China (4.5 percent) and Vietnam (3.3 percent).
Balisacan said the country’s growth is also more rapid than the forecasted first quarter growth rates for Malaysia (4.9 percent), India (4.6 percent) and Thailand (2.8 percent).
“The better-than-expected first-quarter performance this year implies that we are returning to our high-growth trajectory despite the various challenges and headwinds we have faced. However, we have much more work to realize our social and economic transformation agenda toward a prosperous, inclusive and resilient Philippines,” Balisacan said.
Claire Dennis Mapa, PSA undersecretary and national statistician, also said in the same press briefing there were three items on the production side that contributed to the slowdown. These are mining and quarrying, public administration and defense and human health and social work activities.
The major economic sectors, namely agriculture, forestry, and fishing; industry; and services all posted growths in the first quarter of 2023 with 2.2 percent, 3.9 percent and 8.4 percent, respectively.
“Agriculture’s performance this quarter — primarily due to favorable weather conditions — is a promising beginning to 2023, especially given the expected challenge of El Niño later in the year. We have experienced El Niño before and are confident that with adequate planning and preparation, we can successfully navigate it again this year,” Balisacan said.
The NEDA chief said high inflation remains a challenge, and the Bangko Sentral ng Pilipinas’ move to raise its key policy rates to anchor inflation expectations and
ensure price stability may dampen future growth.
“But the improvement in business climate can counter this unintended effect,” Balisacan said.
“Still, the headline inflation rate appears to have reached its highest point. We anticipate this downward trend to continue as inflation eventually eases toward the government’s target range by the fourth quarter of 2023. Indeed, the latest inflation report numbers look promising,” he added.
For his part, Finance Secretary Benjamin Diokno said: “As we continue to rely on domestic demand to propel the economy towards the growth target, the government remains unwavering in protecting the purchasing power of Filipino consumers by acting swiftly to implement direct measures against inflation.”
Despite various risks and challenges, Balisacan said the economic outlook for the Philippines in the near and medium term remains solid.
“We are confident that we will reach our target for this year of six to seven percent growth rate and 6.5 to eight percent for 2024 to 2028,” the NEDA chief said.
Meanwhile, Budget Secretary Amenah Pangandaman even sees an above-target growth for the full year.
“Compared to other major emerging economies in the region, I think we are doing better. With all these data coming in, I can say that the Philippines’ 6.4 percent is actually outstanding. It would be excellent if it reached seven percent, but 6.4, or even six percent, is already outstanding,” Pangandaman said.
“So, we now project 6.6 to 7.5 percent growth from the second quarter to the fourth quarter of 2023, and full-year GDP growth target of about 7.1 percent. The country now has a dynamic domestic economy. This means that even if the regional and global economic environment would worsen, ours has its own momentum and own dynamism to sustain growth,” the budget chief said.
