People cross a street to shop in the Divisoria district of Manila on November 30, 2021. AFP / Ted Aljibe
By Ramon Royandoyan - Philstar.com
MANILA, Philippines — The Philippine economy managed to post a stellar growth in the first quarter, smashing expectations despite the Omicron onslaught at the start of the year.
Gross domestic product, the sum of all products and services created in an economy, grew 8.3% year-on-year in the first three months of the year, the Philippine Statistics Authority reported Thursday.
The latest reading exceeded analysts’ expectations. A BusinessWorld poll of 17 economists yielded a GDP growth median estimate of 6.7% for the period.
Quarter-on-quarter, GDP grew 1.9%. National Statistician Claire Dennis Mapa said real GDP in the first quarter exceeded the comparable period in 2019, or before the pandemic hit.
If anything, the faster-than-expected growth last quarter might prompt the Bangko Sentral ng Pilipinas to start hiking rates soon. Governor Benjamin Diokno last month said the BSP might consider lifting rates in June if the economy, which has grown dependent on cheap money amid the pandemic, is strong enough to sustain its recovery.
But Alex Holmes, Asia economist at London-based Capital Economics, said there's a chance that "the strength of the recovery will begin to wane soon" amid an elevated inflation that could cripple consumer spending anew. The BSP's looming tightening to fight price spikes would also weigh on growth.
"The recovery will have gained momentum in recent months after the Omicron wave faded and restrictions were almost all removed. But while day-to-day disruption from COVID-19 is largely in the rear-view mirror, new headwinds are building," Holmes said in an e-mailed commentary.
"A jump in prices is eating into consumers’ real purchasing power, with inflation hitting 4.9% y/y last month. Meanwhile the central bank is set to begin tightening policy," he added.
This is a developing story.
