Philipine first quarter growth falls by 4.2pc, but in recovery mode

Business | 11 May 2021 12:55 pm

Philippine economy shrank by more than expected in the first quarter, though sequential momentum showed a recovery was underway and suggested the central bank will keep rates at a record low at this week's policy review to support the revival, Reuters reports.

Gross domestic product fell by 4.2 percent in the March quarter from a year earlier, the statistics agency said on Tuesday, worse than the median estimate of a 3 percent contraction in a Reuters poll, but an improvement from the 8.3 percent slump in the previous quarter.

The economy also improved on a sequential basis, with output rising by 0.3 percent from the previous three months on seasonally adjusted terms to mark its third straight quarter-on-quarter growth.

While domestic demand remained sluggish amid pandemic-induced lockdowns, household consumption posted the smallest contraction in four quarters at 4.8 percent, while government spending grew by 16.1 percent, the fastest in the last three quarters.

"The country's strong economic position before the pandemic and improving economic data in recent months point to an economy that is on the mend," Economic Planning Secretary Karl Chua said at a briefing.

That bolsters government expectations that the economy will begin to recover in the second quarter, he said. The government has set a growth target of 6.5 percent to 7.5 percent for this year and 8 percent to 10 percent for next year.

"BSP Governor (Bejamin) Diokno has signalled his preference to keep monetary support for as long as the economy is in recovery mode and we continue to price in a steady policy rate for the balance of 2021," said ING senior economist Nicholas Mapa.

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