The country’s gross domestic product (GDP) surpassed the pre-pandemic level as it grew by 8.3 percent in the first quarter this year, a strong reversal of the 3.8-percent contraction in the same period last year, as the economy reopened with the waning number of COVID-19 infections.
The Philippine Statistics Authority (PSA) said growth in the first quarter exceeded the median analyst forecast of 6.7 percent, making the Philippines the fastest-growing economy in the East Asian Region for the period. On a seasonally adjusted quarter-on-quarter basis, the economy grew by 1.9 percent compared to the fourth quarter of 2021.
Data showed the first-quarter expansion was the strongest in the past three quarters, or since the 12.1-percent growth in the second quarter last year. The expansion in the first three months was also significantly stronger than the 7.8-percent expansion in the fourth quarter of 2021.
National statistician and civil registrar general Dennis Mapa said in an online briefing that the main contributors to the first quarter growth were manufacturing, 10.1 percent; wholesale and retail trade and repair of motor vehicles and motorcycles, 7.3 percent; and transportation and storage, 26.5 percent.
Among the major economic sectors, agriculture, forestry, and fishing; industry and services all posted positive growths in the first quarter of 2022 with 0.2 percent, 10.4 percent, and 8.6 percent, respectively.
On the demand side, household final consumption expenditure grew by 10.1 percent in the first quarter of 2022. Other items that also recorded growths were government final consumption expenditure, 3.6 percent; gross capital formation, 20.0 percent; exports of goods and services, 10.3 percent; and imports of goods and services, 15.6 percent.
Net primary income from the rest of the world grew by 103.2 percent, bringing the gross national income to grow by 10.7 percent in the first quarter of 2022.
Despite the stronger first-quarter GDP performance, Economic Planning Secretary Karl Kendrick Chua recommended keeping the GDP target range of 7 to 9 percent for the entire year.
Chua emphasized the importance of policy continuity by the incoming administration.
“The Duterte administration has enacted many [vital] reforms, like the CREATE Law, Rice Tariffication Law, ‘Build, Build, Build, National ID, retail trade liberalization… All of them should be retained, not reversed,” Chua said.
Chua added that the incoming administration must address the full economic recovery from the COVID-19 pandemic and the acceleration in the inflation rate.
In a joint statement of the Duterte administration’s economic managers composed of Chua, Finance Secretary Carlos Dominguez III, and Budget officer in charge Tina Rose Marie Canda, said the country has overcome the country’s greatest economic and health challenges.
“The headwinds we faced were strong, but our quick rebound from the Omicron surge in January proved that we can live and deal with the virus. With our strengthened healthcare capacity and accelerated vaccination program, we were able to contain the surge and safely reopen the economy,” they said.
On Feb. 1, the government shifted economic centers to alert level 2. By the end of March, around 70 percent of the economy was placed in alert level 1.
Economic managers said other economic indicators support this strong recovery. Google mobility data improved further when the alert levels were lowered. Visits to the transit stations are now 30 percent higher than the pre-pandemic level, while visits to workplaces have also exceeded the pre-pandemic level by around 20 percent.
Likewise, the unemployment rate in March 2022 fell to 5.8 percent, the lowest since the start of the pandemic. Employment creation is now at 4.4 million jobs above the pre-pandemic level.
Other positive developments include manufacturing, which saw a volume of production index growth of 336 percent in March 2022; external trade, with a growth rate of 18.6 percent in March of 2022; and remittances, which hit $2.8 billion in February of 2022.
“Our strong economic performance moves us closer to achieving our growth target of 7 to 9 percent this year, but we will not rest on our laurels. We will continuously work hard to strengthen our domestic economy against heightened external risks such as the Russia-Ukraine conflict, China’s slowdown, and monetary normalization in the United States,” economic managers said.
But private economists warned of economic headwinds building in the coming months as rising prices fueled by supply chain disruptions and the Ukraine conflict squeezed household budgets.
The Philippines’ next president will face a “tough challenge” when he takes office on June 30, with inflation and record government debt among the most pressing issues, warned Emilio Neri, lead economist at the Bank of the Philippine Islands.
Palace spokesman Martin Andanar, however, said the next president need not worry about the current state of the economy, pointing to the strong first quarter GDP performance.
Andanar also said the foreign direct investments in February 2022 rose by 46.3 percent year-on-year to $893 million net inflows from $611 million in the same month in 2021.
The Department of Trade and Industry (DTI), meanwhile, lined-up a list of priority programs for endorsement to the transition team of the incoming administration.
Trade Secretary Ramon Lopez said the DTI will soon meet with the transition group and with his replacement as department head.
He said it was vitally important to continue policy reforms and to avoid reversing these.
Rep. Joey Sarte Salceda of Albay described the first quarter GDP growth as “very strong.”
However, he said serious challenges remain as the agriculture sector continues to lag other sectors, shrinking by 0.7 percent quarter-in-quarter. “This continued underperformance will bear down on the price and availability of food, with implications on general prices and living conditions,” he said.
He said his three main recommendations for the incoming administration would be first, to focus on agriculture and food supply, second, strengthen safety nets, and third, boost investor confidence in the Philippines.