Philippines: Philippine economy posts remarkable growth in Q1
May 19, 2016
In the first quarter of this year, GDP expanded 6.9% over the same period last year. The reading exceeded the 6.5% rise recorded in Q4 2015 and beat market expectations of a 6.6% increase. In addition, the reading marked the fastest expansion in nearly three years.
Q1’s acceleration was mainly driven by upticks in private consumption and fixed investment. Conversely, government consumption slowed and the external sector represented a notable drag on growth. Total consumption expanded at a marginally weaker pace of 7.4% in Q1 (Q4: +7.5% year-on-year). Private consumption strengthened, speeding up from 6.5% growth in Q4 to a 7.0% increase in Q1, which marked the highest reading in four years. By contrast, public spending growth decelerated from Q4’s outstanding 15.8% to 9.9% in Q1. Fixed investment remained a very bright spot, growing a remarkable 25.6% in Q1 (Q4: +24.2% yoy), which represented the largest gain since Q2 2010.
In the external sector, exports of goods and services expanded in 6.6% in Q1, which was down from the 10.9% increase observed in Q4. Conversely, imports sped up from a 14.9% increase in Q4 to a 16.2% rise in Q1. As exports weakened while imports gained momentum, the external sector’s net contribution to overall economic growth deteriorated, falling from minus 0.8 percentage points in Q4 to minus 4.6 percentage points in Q1. The external sector had not performed that weakly in over four years.