Philippines: GDP growth improves in Q1, yet again surprising to the upside
According to a preliminary estimate, GDP growth improved to 8.3% year-on-year in the first quarter, from 7.8% in the fourth quarter of last year. Q1’s reading marked the best reading since Q2 2021 and brought the economy above its pre-pandemic level. The reading beat market expectations.
A surge of Omicron cases early in the quarter wasn’t enough to dampen spending, with private consumption increasing 10.1% in the first quarter, which was above the fourth quarter’s 7.5% expansion. The relaxation of Covid-19 restrictions after the initial Covid-19 wave supported consumer demand. In addition, fixed investment growth edged up to 11.0% in Q1, compared to the 10.8% expansion logged in the prior quarter. Public consumption growth, meanwhile, grew at the slowest pace since Q4 2021, expanding 3.6% (Q4 2021: +7.8% yoy).
On the external front, exports of goods and services growth accelerated to 10.3% year-on-year in the first quarter, which marked the best reading since Q2 2021 (Q4 2021: +7.7% yoy). In addition, imports of goods and services growth sped up to 15.6% in Q1 (Q4 2021: +14.3% yoy), marking the highest reading since Q2 2021.
On a seasonally-adjusted quarter-on-quarter basis, economic growth slowed notably to 1.9% in Q1, following the previous quarter’s 3.5% growth. Q1’s reading marked the worst reading since Q2 2021.
Looking ahead, our panelists expect growth to maintain momentum in Q2. The reopening of the economy following the easing of Covid-19 cases will boost private consumption. That said, high inflation and the pre-election spending ban pose negative risks to the outlook.