Data from the Philippine Statistics Authority published on Thursday showed that the Southeast Asian country’s economy grew by 5.6 per cent year on year, coming in below the 6.1 per cent figure forecast by economists polled by Reuters. It also marked a significant slowdown from the 6.5 per cent year on year growth rate the Philippines recorded in the first quarter of 2018.
Economists blamed lower government spending for the weak showing. “The slump in Q1 GDP growth in the Philippines was mainly due to delays in passing this year’s budget, which means that growth should bounce back this quarter,” said Alex Holmes, emerging Asia economist for Capital Economics. Mr Holmes thinks growth will come in at about 6 per cent for the whole of 2019, within the government’s target. Exports have also been a weak point. Goods shipped to the rest of the world declined for a fifth consecutive month in March, dragged down by a fall in shipments of electronics.
The lacklustre data could increase the likelihood of the Philippines central bank cutting interest rates when it meets later on Thursday. Analysts think a drop in inflation in April could give decision makers at Bangko Sentral Ng Pilipinas the breathing room to do so. The latest gross domestic product numbers also come at an interesting political juncture, with Filipinos set to go to the polls in mid-term elections on May 13.