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 Philippine Statistics Authority (PSA) showed the gross domestic product (GDP) grew by 5.7 percent in the first quarter of the year, faster than the 5.5-percent growth recorded in the fourth quarter of 2023.

However, the economy slowed 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 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 said 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 said that the 4.6-percent growth in household spending was the lowest quarterly figure since the 2.6 percent recorded in the third quarter of 2010 on the back of the 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 it was important to recognize the moderate increase in domestic demand that resulted from the high inflation and “reflected the less favorable business sentiment.”

“From the start of the year, we’ve been experiencing shocks,” Balisacan said. “Construction slowed down, no doubt affected by the prolonged periods of extreme heat. Household spending also slowed due to the elevated prices of major food items and the heat wave.”

Nonetheless, 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 was “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 saw the heat still being a drag on the economy in the second quarter, Balisacan said, “I’ve been in government for a while…I don’t see any more serious efforts in dealing with climate change than what we are doing today.”