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Economy grew 8.3% in Q1, region’s fastest

Investor community now awaits Marcos’ cabinet picks, in particular, the composition of his economic team and his plans on how to address key issues such as accelerating inflation and debt consolidation

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The economy is back in pole position in the Asian region after posting a strong 8.3 percent growth in the first quarter.

ING Philippines senior economist Nicholas Mapa noted the next president is inheriting a robust economy as growth in the second quarter that included the peak of election spending, will likely show another healthy number.

“On top of a robust economy, Marcos will enjoy a substantial amount of political capital to begin his term, as his senate is set to secure 11 out of the 12 seats in the Senate,” Mapa explained.
He added that “a majority mandate on top of a sizable political capital opens the door for opportunities for Marcos to implement substantial economic reforms early on in his single 6-year term.”

“The investor community now awaits Marcos’ Cabinet picks, in particular, the composition of his economic team and his plans on how to address key issues such as accelerating inflation and debt consolidation,” Mapa indicated.

Of gross domestic product (GDP) figures released recently for Southeast Asian countries, the Philippines posted the highest output during the period, followed by Vietnam’s 5.3 percent.

Indonesia reported a 5 percent growth and Singapore, 3.4 percent during the past quarter.

The growth figure was also higher than the 6.8 percent consensus among economists.

The Philippine Statistics Authority (PSA) attributed the robust growth figure to 10.1 percent recovery of consumer spending and 20 percent investments gain as strict health restrictions were lifted.

Mapa said economic activity remained brisk during the period, “despite an Omicron-induced surge of Covid infections early on in the quarter.”

He noted that the recovery brought the economy back to pre-Covid levels.

“Private consumption jumped 10.1 percent with a strong pickup in sectors related to transportation and recreation. Capital formation also delivered strong growth, gaining 20 percent. Fixed capital formation rose 11 percent given robust construction spending. Government spending was also positive despite slowing to a 3.6 percent gain from a year ago.

Tourism on a comeback

Rizal Commercial Banking Corp. chief economist Michael Ricafort said “another important turning point in the country’s economic recovery was the resumption of tourism for some fully-vaccinated foreigners since 10 February.”

Moreover, a joint statement from economic managers of President Rodrigo Duterte including Socioeconomic Planning Secretary Karl Kendrick Chua, Finance Secretary Carlos Dominguez III and Budget officer-in-charge Tina Rose Marie Canda assessed the government “adeptly managed the risks posed by Covid-19.”

On a seasonally adjusted quarter-on-quarter basis, which is the benchmark used by experts to track the momentum of the economy, GDP grew by 1.9 percent compared to the fourth quarter of 2021.

Managers added other economic indicators support strong recovery.

Mobility increasing

“Google mobility data improved further when we lowered the alert levels. Visits to the transit stations are now 30 percent higher than the pre-pandemic level, while visits to workplaces have also exceeded the pre-pandemic level by around 20 percent,” Chua added.

The unemployment rate in March 2022 fell to 5.8 percent, the lowest since the start of the pandemic. Employment creation is now at 4.4 million above the pre-pandemic level.

The managers also said that the government have restored many jobs and livelihood by shifting to a more endemic mindset, accelerating vaccination and implementing granular lockdowns that only targeted the areas of highest risk while allowing the majority of our people to work and earn a living.

“Other positive developments include manufacturing, which saw a volume of production index growth of 336 percent in March of 2022; external trade, with a growth rate of 18.6 percent in March of 2022; and remittances, which hit $2.8 billion in February of 2022,” managers said.

All of these attests to the sustained gains from the government’s proactive response to recover fully from the pandemic.

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