Philippine Economy Expands Less Than Forecast

The Philippine economy logged a weaker-than-expected growth at the start of the year on lower net exports even ahead of the implementation of trade tariffs, official data showed on Thursday.

Gross domestic product grew 5.4 percent year-on-year in the first quarter, which was slightly faster than the 5.3 percent rise in the preceding period, the Philippine Statistics Authority reported. On a quarterly basis, economic growth weakened to 1.2 percent from 1.5 percent in the fourth quarter.

On the demand side, growth in household consumption improved to 5.3 percent in the first quarter from 4.7 percent. Ahead of elections, government consumption surged 18.7 percent after a 9.0 percent gain.

Meanwhile, gross capital formation increased at a slower pace of 4.0 percent after rising 5.5 percent.

Exports of goods and services climbed 6.2 percent, better than the 3.3 percent increase a quarter ago. Likewise, growth in imports advanced to 9.9 percent from 2.7 percent.

Given the recent downside surprise to GDP growth and inflation, it is increasingly likely that the central bank will cut rates aggressively this year, ING economist Deepali Bhargava said. The economist expects another 75 basis points of rate cuts in 2025.