Philippines economy outperforms in reprieve for Marcos

Philippines GDP in the three months through March grew 8.3 per cent from a year ago. PHOTO: AFP

MANILA (BLOOMBERG) - The Philippine economy outperformed expectations in the first quarter, giving presumptive president Ferdinand Marcos Jr some breathing room as he braces himself for challenges from faster inflation to slowing global growth.

Gross domestic product (GDP) in the three months through March grew 8.3 per cent from a year ago, the Philippine Statistics Authority said on Thursday (May 12), versus the median estimate for a 6.8 per cent expansion in a Bloomberg survey. That compares with a revised 3.8 per cent contraction in the year-ago period.

"We have set the sails for the next administration to achieve rapid and more inclusive growth in 2022 and beyond," said economic planning secretary Karl Chua in a briefing. "The Philippine economy is a strong and steady ship ready for whatever storms might lie ahead."

Private consumption and investments, both key growth drivers, jumped during the quarter, while government spending weakened in the same period.

Mr Marcos Jr, the presumptive president-elect after the May 9 elections, indicated on Wednesday that boosting jobs, managing food and energy prices and pushing for more infrastructure projects will be his economic priorities.

The nation's policymakers have said GDP needs to grow at least 6 per cent for the next five to six years to help pare debt.

That makes it key for the authorities to tackle inflation, given policymakers from India to South Korea have voiced concern about inflation emerging as a greater threat to growth by denting disposable incomes and, in turn, demand in the economy.

The nation faces one of the fastest inflation rates in South-east Asia as food and fuel price shocks from the war in Europe threaten the easy money policy of Bangko Sentral ng Pilipinas (BSP). The central bank is scheduled to review monetary settings on May 19.

"The narrative that the economy is in need of support may no longer hold water," said Mr Nicholas Mapa, a senior economist at ING Groep in Manila. "A robust recovery coupled with above target inflation means BSP will hike rates next week, lest they fall further behind the curve with regional central banks."

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