Philippine growth continued to be on a strong footing in the first quarter, stimulated by domestic demand. On a year-on-year basis, the economic growth accelerated to 6.8 percent in the March quarter, from 6.6 percent, coming in line with market expectations. On a sequential basis, GDP growth remained at 1.5 percent.
Domestic demand saw a strong growth at 8.7 percent year-on-year in the first quarter, a rise from 6.8 percent year-on-year in the prior quarter. Investment and government consumption mainly drove the headline growth, both of which bolstered on a year-on-year basis. Investment spending rose 12.5 percent year-on-year in the first quarter of this year from 8.3 percent year-on-year.
Private consumption slowed to 5.6 percent year-on-year in the first quarter after rising to a four-quarter high of 6.2 percent year-on-year in the fourth quarter. This easing is expected to be temporary with some expenditures front-loaded ahead of the tax reform in early 2018. In the meantime, net exports continued to be a drag, easing the overall growth by 2.9 percentage point. This pattern is in line with the widening in the trade deficit.
The prospects for the remainder of the year continue to be favorable with domestic demand likely to be further augmented by the government’s planned rise in infrastructure spending, noted ANZ in a research report.
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