MANILA, Philippines (3rd UPDATE) - The Philippine economy grew by 5.7 percent in the first quarter, much slower than market expectations, as it continued to feel the lingering effects of super typhoon "Yolanda" (Haiyan).
Gross domestic product (GDP) rose 5.7 percent in the first three months of the year, much lower than the 6.4 percent median estimate of 20 analysts polled by Reuters.
The pace of growth was also slower than the 6.3 percent year-on-year growth in the fourth quarter of 2013, and the annual 7.7 percent growth in the first quarter of 2013.
Despite the slowdown, Socio Economic Planning Secretary Arsenio Balisacan said the Philippines remains the third fastest growing economy in Asia in the first quarter, next only to China with 7.4 percent and Malaysia with 6.2 percent.
"The relatively slow growth is expected, given the magnitude of the destruction in production capacity. In agriculture, permanent crops, notably coconuts, were felled. Damage to agricultural output also disrupted supply chains, which may partly explain why food manufacturing output also declined. The tourism and insurance industries likewise slowed down in the first quarter as they are still reeling from the impact of natural calamities last year," Balisacan said.
He was referring to the damage caused by the earthquake in Bohol and "Yolanda" in central Visayas.
The impact of "Yolanda" on agricultural output had offset the strong growth of the services and industry sectors.
National Statistician Lisa Bersales said the first quarter growth was driven by the services sector, which grew by 6.10 percent, and by the industry sector, which grew by 5.5 percent.
Balisacan said there was urgency to speed up the government's typhoon rehabilitation efforts.
"Reconstruction efforts will rebuild assets and restore supply chains. At the same time, we need to strengthen the capacity of people, families and communities to participate in the growth process once again," he said.
The NEDA chief is still confident full-year growth will meet government's target of 6.5 to 7.5 percent.
"Growth in the first quarter of 2014 indicates that the economy will continue to grow at an increasing pace in the succeeding three quarters. The growth momentum will likely strengthen within the near-term, notwithstanding the risk and challenges that the economy is facing. We remain confident that we will meet the growth target of 6.5 to 7.5 percent for the full year of 2014," he said.
Last year, the Philippine economy grew by 7.2 percent, the fastest in Southeast Asia.
Meanwhile, Finance Secretary Cesar Purisima remains upbeat about the growth of the Philippine economy.
“The Philippines is on the right path with 9 consecutive quarters of above 5.5% GDP growth, bringing President Aquino’s average quarterly GDP growth rate to 6%," he said in a statement.
Purisima noted data on manufacturing, exports and revenue collection are all up, and there is good reason to believe that regional and global companies are now training their sights on Manila.
However, ING economist Joey Cuyegkeng says the growth number was disappointing, particularly government spending.
"One disappointment is government consumption... We were expected a more robust growth... It is possible that government construction may have been also affected by the disaster and politicking," he said.
Cuyegkeng said they are reviewing its 2014 growth forecast for possible downgrade from the current 6.8 percent forecast. - With ANC