PHL economy slows to 5.2% in Q1 from 5.6% y-o-y, PSA reports

Published May 28, 2015 10:22am

(Updated 11:55 a.m.) The economy grew at a slower 5.2 percent in the first quarter of 2015 from 5.6 percent a year earlier, as the Philippines experienced bottlenecks and preparedness issues at the level of implementing agencies.

"This is significatly lower than consensus... even below the lowest," Gonzalo Ordoñes, First Metro Securities Brokerage Corp. president, told GMA News Online.

This is the slowest in three years, according to stockbrokerage Regina Capital Development Corporation, citing a Bloomberg report.

Definitely the first quarter numbers are a result of disappointing government spending and the slowdown in exports, Jonathan Ravelas, market strategist at BDO Unibank, said in a separate interview with GMA News Online.

Deficit spending was unchanged and reached P33.5 billion in the first quarter of the year, the Department of Finance said on Monday.

"The end-March figure is significantly less than the P84.1 billion shortfall recorded for same period in 2014 as the 18 percent year-on-year improvement in revenue collection outpaced expenditure growth of 4 percent," the Finance Department said.

"Similarly, the budget deficit for Q1 2015 is lower by 66 percent or P64.6 billion relative to the P98.1 billion target for the period," it added.

In the doldrums

Merchandise exports increased by 2.1 percent to $5.376 billion in March, from $5.268 billion a year earlier, on the heels of three consecutive months of declines since December 2014, the National Economic and Development Authority (NEDA), revealed on Tuesday.

However, Philippine shipments remained in the doldrums year-on-year, considering that exports grew by 12.1 percent in March 2014, data released by the Philippine Statistics Authority (PSA) showed.

Government officials cited "bottlenecks" and "preparedness" issues at the level of implementing agencies.

"Public construction dropped by 24.6 percent in Q1 of 2015 from a growth of 17.5 percent last year," the PSA said.

Implementing agencies like the Department of Budget and Management and the Department of Public Works and Highways were able to speed up their disbursements and project implementation after the initial difficulties in January, Socioeconomic Planning Secretary Arsenio Balisacan noted in a statement.

"But the missed opportunity to have a higher growth for the period is not totally foregone as we still expect public spending to pick up for the rest of the year," Balisacan noted.

"According to the latest report of the Department of Budget and Management, the disbursement performance for the first three months of 2015 shows a trend towards faster government spending," he said.

"The growth performance in this quarter tells us that there are still issues that the government needs to confront in order to maintain the high level of confidence that the business sector is showing and entrusting the country," he added.

The manufacturing sector also performed poorly. It slowed down to 5.9 percent from 7.0 percent, PSA data showed.

Placing a drag on the sector were makers of wearing apparel (down 11.1 percent) and furnitures and fixtures (down 6.8 percent), and accounting and computing machinery (down 26.3 percent).

The financial subsectors also grew slower, with banks expanding 3.9 percent from 7.5 percent and non-banking institutions expanding by 4.3 percent from 5.4 percent.

Still 2nd fastest

Still, the Philippines is the second-fastest growing ASEAN-5 economy in Q1, second only to Malaysia (5.6 percent), Finance Secretary Cesar Purisima said in a separate statement.

ASEAN-5 comprises Indonesia, Malaysia, Philippines, Singapore and Thailand – the biggest economies among the 10-member Association of Southeast Asian Nations. Brunei, Cambodia, Lao PDR, Myanmar and Vietnam complete the ASEAN.

"Among all Asian countries that have released their growth rates, the Philippines stands next to China (7.0 percent), Vietnam (6.0 percent), and Malaysia (5.6 percent). This rounds out 13 straight quarters of above 5 percent growth in what is now 65 straight quarters of growth since the 1997 Asian financial crisis," according to the Department of Finance.

"The main driver of GDP (gross domestic product) growth for the quarter was the services sector which grew by 5.6 percent from 6.8 percent," the Philippine Statistics Authority said Thursday.

"Industry, on the other hand, accelerated to 5.5 percent from 5.4 percent posted last year. Similarly, the Agriculture sector accelerated to 1.6 percent from 0.6 percent," it added.

Numbers fluctuate each quarter but they clearly show an unmistakable positive trajectory. We are less concerned about the quarterly numbers game than getting the foundations of our growth right, according to the Finance secretary. —Earl Rosero/Victor Sollorano/KG, GMA News

Tags: phlgdp, phleconomy, psareport