MANILA (UPDATE 2) – The Philippine economy remained in recession, with gross domestic product contracting 4.2 percent in the first quarter, the Philippine Statistics Authority said Tuesday.
The first quarter GDP performance was worse than the 3.2 percent contraction forecast by analysts in a poll conducted by Bloomberg, and the 3 percent contraction seen in a Reuters poll.
This was also the fifth straight quarter of GDP contraction, though there were signs that recovery was underway.
The Q1 figure was an improvement from the 8.3 percent slump in the previous quarter. On a sequential basis, the economy also improved with output rising 0.3 percent from the previous three months on seasonally adjusted terms to mark its third straight quarter-on-quarter growth.
While domestic demand remained sluggish amid pandemic-induced lockdowns, household consumption posted the smallest contraction in four quarters at 4.8 percent, while government spending grew 16.1 percent, the fastest in the last three quarters.
"The country's strong economic position before the pandemic and improving economic data in recent months point to an economy that is on the mend," said Socioeconomic Planning Secretary Karl Chua during a briefing.
Economic activities gradually regained traction in the first quarter as the restrictions eased. However, local executives in Metro Manila reimposed curfews on March 15, and the national government ordered a new lockdown on March 29 as COVID-19 cases continued to rise.
The National Economic and Development Authority (NEDA) earlier set a growth target for the year of 6.5 to 7.5 percent.
Despite the reimposition of a lockdown, the country has time to "catch up" on its growth target, Chua earlier said.
"Once the present spike is over, we can implement quarantine relaxations in a phased approach to boost our recovery this year. For instance, we can move the NCR towards MGCQ to allow families and children to participate in the economy and restart face-to-face schooling," Chua said.
The NCR Plus bubble remains under modified enhanced community quarantine until May 14.
"Our economy may slow down in early 2021 given recent developments, but we will not backpedal," the country’s economic planning chief said.
The pandemic-hit economy shrank 9.6 percent in 2020, its worst performance since the end of World War 2.
A Reuters poll of economists expects the Bangko Sentral ng Pilipinas to keep interest rates steady during its meeting on Wednesday to prop up the economy.
Some economists even expect the BSP to stand pat for the rest of 2021, despite inflation having breached its 2 to 4 percent target band mainly due to tight pork supply.
The Southeast Asian country is battling one of Asia's worst coronavirus outbreaks with more than a million cases recorded and more than 18,000 deaths.
- Withe a report from Reuters