MANILA (UPDATE 2) - The Philippines' gross domestic product (GDP) grew 5.7 percent in the first quarter of 2024, the Philippine Statistics Authority said on Thursday.

This was higher than the 5.5 percent clip seen in the fourth quarter of 2023, but lower than the 6.4 percent growth seen in the first quarter of last year.

The PSA said all major economic sectors, namely: Agriculture, forestry, and fishing (AFF); Industry; and Services posted year-on-year growths in the first quarter.

Agriculture however saw a sharper slowdown in growth amid the effects of the El Niño phenomenon.

Household consumption grew by 4.6 percent while government spending grew by 1.7 percent, gross capital formation grew by 1.3 percent, exports of goods and services increased 7.5 percent, and imports of goods and services were up 2.3 percent.

National Statistician Dennis Mapa said the 4.6 percent growth in private consumption is the slowest quarterly figure since the 2.6 percent seen in the third quarter of 2010, excluding the shrinking of consumption during the COVID-19 pandemic.

Socioeconomic Planning Secretary Arsenio Balisacan said the heat hurt the growth of construction and household spending.

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“Construction slowed down, no doubt affected by prolonged periods of extreme heat. Household spending also slowed due to elevated prices of major food items and the heat wave,” he said.

He stressed, however, that the government is working hard to address the impact of climate change.

Asked if he sees the heat still becoming a drag to the economy in the second quarter, Balisacan said, “I’ve been in government for a while…I don’t see any more serious efforts now in dealing with climate change than what we are putting today.”

“(The) key really is really innovation. We are encouraging--as you know NEDA is also spearheading the efforts to get this innovation ecosystem coming up quickly so that we can get our people, our entrepreneurs, startups, even ordinary citizens come up with solutions to our daily problems,” he said.

“On a bigger scale of course we need a lot of investment, including infrastructure development to address climate change, especially for adaptation, especially in vulnerable areas like agriculture. And we are tapping development institutions to augment our capacity there, particularly in the financing of adaptation measures,” he added.

He also noted that capital formation may have appeared slower because of the lag effects of higher interest rates.

"In terms of the capital formation, I think these are the lag effects already of relatively elevated interest rates. As you know those interest rates in the past, past 4 quarters, 5 quarters are still being felt today. So that may linger for a while," he said.

Economic managers earlier lowered the growth target for 2024 to 6 to 7 percent from 6.5 to 7.5 percent citing external factors such as global demand and trade growth, oil price movements, expected exchange rate and inflation trends.

The Asian Development Bank also sees the Philippine economy growing 6 percent this year, down from an earlier estimate of 6.2 percent.

The World Bank meanwhile said Philippine GDP will grow by an average of 5.8 percent in 2024.

More details to follow.