The Philippine economy grew faster in the first quarter of 2024 compared to the previous three-month period on the back of elevated inflation and interest rates, the statistics bureau said on Thursday.

Data from the state-run Philippine Statistics Authority showed that the country's gross domestic product grew by 5.7 percent in the first quarter of this year, faster than the 5.5 percent GDP growth recorded during the fourth quarter of 2023.

However, the country's economy slowed down on a year-on-year basis from the 6.4 percent expansion posted in the first quarter of 2023 due to declining consumer spending offsetting the export growth.

On a seasonally adjusted basis, the economy grew 1.3 percent quarter-on-quarter but weaker than the 2.1 percent pace in the fourth quarter.

In a press briefing, PSA Chief and National Statistician Claire Dennis Mapa said the main contributors to the growth were financial and insurance activities at 10.0 percent, wholesale and retail trade, repair of motor vehicles and motorcycles at 6.4 percent, and manufacturing at 4.5 percent.

Mapa added that household spending slowed from the 5.3 percent expansion in the fourth quarter of 2023 but recorded a relatively solid increase of 4.6 percent in the first quarter. 

He added that the 4.6 percent growth in household spending is the lowest quarterly figure since the 2.6 percent recorded in the third quarter of 2010  on the back of the country’s elevated inflation at 3.8 percent as of April and the ongoing El Niño phenomenon.

In the same briefing, National Economic and Development Authority Secretary Arsenio Balisacan said the moderate growth in domestic demand on the back of high inflation, which “reflected the less favorable business sentiment,” must be acknowledged.

"From the start of the year, we’ve been experiencing shocks," Balisacan said.

“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,” Balisacan added.

Despite that, Balisacan said the Philippines is still confident about economic growth, particularly given the notable increase in exports driven by a resurgence in shipments of electronic goods.

Balisacan said the country's first-quarter GDP growth rate is "about the same" as Vietnam’s, surpassing other economies like China at 5.3 percent, Indonesia at 5.1 percent, and Malaysia at 3.9 percent.

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 is really innovation. 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.