Surprise: Philippine growth suffers sharp slowdown in first quarter

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Philippine economy slowdownIn a rare slowdown of its otherwise over the past years strongly accelerating economy, the Philippine’s GDP growth surprisingly fell to a three-year low in the first quarter of 2015.

The country’s economy grew just 5.2 per cent in the three months to March compared with 6.6 per cent expansion in the fourth quarter of 2014. This growth was the slowest in three years since the 3.8-per cent expansion in the last quarter of 2011, according to government data.

Growth was hampered by a sharp drop in exports, which grew just one per cent as opposed to 12.8 per cent in the fourth quarter of last year. Less government spending was another reason blamed for the decline. However, despite the weak figures, the Philippines so far remain the best performer in the Association of Southeast Asian Nations, or ASEAN.

The first quarter figure was primarily driven by the services sector which accelerated by 5.6 per cent as transport, storage and communication, real estate, trade, manufacturing and other services all saw positive growth.

The industry sector expanded by 5.5 per cent, slightly lower compared to the 5.4-per cent growth in the first quarter of 2014.The agriculture sector posted 1.6-per-cent progress, leaping from the 0.6-per-cent rate in the same period last year.

Gross national income grew by 4.7 per cent, lower than the 6.6 per cent in the same period last year. Per capita growth similarly slowed down to 3.4 per cent from 3.8 per cent in last year’s first quarter.

“While growth in the private sector remains robust, the slower than programmed pace of public spending, particularly the decline in public construction, has slowed down the overall growth of the economy,” Economic Planning Secretary Arsenio Balisacan told a press conference in Manila on May 28.

“Exports were the other source of the slowdown,” he added, blaming the growth downtrend in China and some emerging economies for the weak demand.

Export growth in March slowed to 2.1 per cent from 12.1 per cent during the same period in 2014, according to the national statistics office. Government spending of $1.2 billion in the first quarter was 13 per cent below target despite growing by four per cent from the same period in 2014, according to data from the finance department.

The government is still targeting 7 to 8-per cent GDP growth for 2015, higher than the 6.5 to 7.5-per cent target set for 2014.

Analysts are calming down after the Philippines stock exchange fell deep into the red after the news came out.

“We do not see cause for too much alarm. Exports are likely to recover later in the year, and domestic demand is still growing at a very healthy rate,” Daniel Martin, senior Asia Economist at Capital Economics, wrote in a note.

Expectations are that the Philippines could meet at least the low end of its 7 to 8-per cent target as government spending started to pick up March, with inflation and interest rates remaining low.

 

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In a rare slowdown of its otherwise over the past years strongly accelerating economy, the Philippine's GDP growth surprisingly fell to a three-year low in the first quarter of 2015. The country's economy grew just 5.2 per cent in the three months to March compared with 6.6 per cent expansion in the fourth quarter of 2014. This growth was the slowest in three years since the 3.8-per cent expansion in the last quarter of 2011, according to government data. Growth was hampered by a sharp drop in exports, which grew just one per cent as opposed to 12.8 per cent...

Reading Time: 2 minutes

Philippine economy slowdownIn a rare slowdown of its otherwise over the past years strongly accelerating economy, the Philippine’s GDP growth surprisingly fell to a three-year low in the first quarter of 2015.

The country’s economy grew just 5.2 per cent in the three months to March compared with 6.6 per cent expansion in the fourth quarter of 2014. This growth was the slowest in three years since the 3.8-per cent expansion in the last quarter of 2011, according to government data.

Growth was hampered by a sharp drop in exports, which grew just one per cent as opposed to 12.8 per cent in the fourth quarter of last year. Less government spending was another reason blamed for the decline. However, despite the weak figures, the Philippines so far remain the best performer in the Association of Southeast Asian Nations, or ASEAN.

The first quarter figure was primarily driven by the services sector which accelerated by 5.6 per cent as transport, storage and communication, real estate, trade, manufacturing and other services all saw positive growth.

The industry sector expanded by 5.5 per cent, slightly lower compared to the 5.4-per cent growth in the first quarter of 2014.The agriculture sector posted 1.6-per-cent progress, leaping from the 0.6-per-cent rate in the same period last year.

Gross national income grew by 4.7 per cent, lower than the 6.6 per cent in the same period last year. Per capita growth similarly slowed down to 3.4 per cent from 3.8 per cent in last year’s first quarter.

“While growth in the private sector remains robust, the slower than programmed pace of public spending, particularly the decline in public construction, has slowed down the overall growth of the economy,” Economic Planning Secretary Arsenio Balisacan told a press conference in Manila on May 28.

“Exports were the other source of the slowdown,” he added, blaming the growth downtrend in China and some emerging economies for the weak demand.

Export growth in March slowed to 2.1 per cent from 12.1 per cent during the same period in 2014, according to the national statistics office. Government spending of $1.2 billion in the first quarter was 13 per cent below target despite growing by four per cent from the same period in 2014, according to data from the finance department.

The government is still targeting 7 to 8-per cent GDP growth for 2015, higher than the 6.5 to 7.5-per cent target set for 2014.

Analysts are calming down after the Philippines stock exchange fell deep into the red after the news came out.

“We do not see cause for too much alarm. Exports are likely to recover later in the year, and domestic demand is still growing at a very healthy rate,” Daniel Martin, senior Asia Economist at Capital Economics, wrote in a note.

Expectations are that the Philippines could meet at least the low end of its 7 to 8-per cent target as government spending started to pick up March, with inflation and interest rates remaining low.

 

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