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Philippine GDP Growth Beats Expectations In Q1

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The Philippine economy registered a faster-than-expected growth in the first quarter as the Omicron wave faded and the relaxation of pandemic restrictions boosted a broad-based recovery, data published by the Philippine Statistics Authority showed Thursday.

Gross domestic product grew 8.3 percent from the last year, while the rate was forecast to ease to 6.6 percent from 7.8 percent in the fourth quarter.

On a quarterly basis, the economy climbed 1.9 percent, following the 3.5 percent expansion in the fourth quarter. This was also faster than the expected +1.5 percent.

On the demand-side, household final consumption expenditure grew 10.1 percent in the first quarter. Government expenditure gained only 3.6 percent, while gross capital formation surged 20.0 percent.

Exports and imports advanced 10.3 percent and 15.6 percent, respectively.

All the major economic sectors expanded in the first quarter. Agriculture, forestry, and fishing output gained 0.2 percent. Industry and services posted strong positive growth of 10.4 percent and 8.6 percent, respectively.

The robust economic recovery coupled with above-target inflation points to policy normalization from Bangko Sentral ng Pilipinas, Nicholas Mapa, an ING economist, said.

With GDP now back to pre-Covid levels and with inflation accelerating, the BSP is likely to hike policy rates at the meeting next week, Mapa added.

As the boost from reopening fades and headwinds to consumption bite, the recovery is set to slow, Alex Holmes, an economist at Capital Economics, said. Beyond the high annual growth figures, the overall economic recovery is, and will remain, very weak, he noted.

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