MANILA (UPDATE)- The Philippine economy continued to expand at a fast pace in the first three months of the year, the state statistics bureau said Thursday.
Gross domestic product (GDP) grew 8.3 percent in the first quarter, faster than the 7.8 percent in the fourth quarter of 2021 and the negative 3.8 percent growth rate in the first quarter of 2021, the Philippine Statistics Authority said in a briefing.
The growth was due to the country's improved healthcare capacity and accelerated vaccination program that enabled a "strong and quick" rebound from the surge in COVID-19 cases in January caused by the omicron variant, Socioeconomic Planning Secretary Karl Kendrick Chua said.
Easing restrictions to Alert Level 1 and implementing limited granular lockdowns, as well as the shift to an endemic from a pandemic mindset, have restored jobs and businesses, he said.
Household spending grew 10.1 percent while gross capital formation or business investment grew 20 percent which helped offset a slowdown in government spending that lagged to just 3.6 percent from 16.1 percent the previous year.
“Our strong economic performance moves us closer to achieving our growth target of 7 to 9 percent this year... We have surpassed the pre-pandemic gross domestic product level in the first quarter…Making the Philippines the fastest growing economy in the East Asia region," Chua said.
“But we will not rest on our laurels. We will continue to work hard to strengthen our economy against heightened external risk such as the Russia-Ukraine crisis, China slowdown and monetary normalization in the US,” he added.
Moody's Analytics' Associate Economist Sonia Zhu said the "stunning" Q1 GDP growth would lead to an upward revision of their 2022 outlook.
"Improvements in most sectors drove the strong year-on-year result and saw GDP surpass pre-pandemic levels earlier than anticipated. The first-quarter GDP result will see us upwardly revise our 2022 growth forecast," Zhu said.
This, despite the likelihood of the Bangko Sentral ng Pilipinas hiking rates to stem inflation. But with the rising inflation, Moody's said "we would not be surprised by a rate hike in May."
With the Q1 posting "extraordinary" growth, the country is poised to meet its 7 to 9 percent GDP growth target this year, it said.
Palace Spokesperson Martin Andanar said the strong performance for the quarter is a good transition for the upcoming administration.
"Kagaya ng sinabi ko kanina, magandang transition ito pagdating sa economy dahil ang bagong administrasyon na papasok ay hindi sila magkakandarapa na iangat o pataasin ang GDP dahil mataas na," Andanar said.
(As I've said this is a good transition when it comes to economy since the new administration coming won't have a misstep when it comes to growing the GDP since its already high)
Despite investor concerns, the Makati Business Club said it is looking forward to collaborating with the Marcos administration and other stakeholders "on short-term and long-term solutions to sustain the Philippines’ road to recovery."
"MBC is gathering business sector recommendations on job creation and infrastructure development which will form the Economic and Infrastructure Blueprints, that we will present to the incoming administration and Congress," it said.
The economic cluster, meanwhile, will continue pushing for recovery in the next 5 months, Andanar said.
In 2021, the economy grew 5.8 percent, slightly better than forecasts but still below pre-pandemic levels of growth.
RCBC chief economist Michael Ricafort told ANC that without the war in Ukraine, it would have been easy for the Philippines to reach its 7 percent growth target this year.
“If not for that, the 7 percent would have been easily achieved this year but definitely, we have seen the further reopening of many sectors, many industries like tourism,” Ricafort said.
“Soon later this year, it's possible we’ll be back to pre-Covid level. The country will be back to its growth path because this has been ongoing,” he added.
With further recovery and the easing of restrictions, Chua earlier said the economy could return to its pre-pandemic growth this year.
-- with reports from Warren De Guzman and Jessica Fenol, ABS-CBN News