After the January omicron outbreak, the Philippine economy grew by 8.3% in the first quarter of 2022, thanks to eased pandemic limitations that boosted consumption.
The economy expanded faster than the previous quarter’s 7.8%, indicating a change from the first three months of 2021 when it dropped 3.8 percent. BusinessWorld polled economists and found that the median estimate was 6.7 percent.
The statement by the Philippine Statistics Authority came just three days after Ferdinand “Bongbong” Marcos, Jr., the late dictator’s son and namesake, won a national election.
Marcos Jr. campaigned as a continuation candidate, vowing to retain outgoing President Rodrigo Duterte’s infrastructure and public order measures.
Apart from maintaining Duterte’s “Build Build Build” initiative, Marcos has avoided presidential debates and media appearances, leaving little information about his economic policy available.
This year, the government has allocated 981 billion pesos ($18.8 billion), or 5% of GDP, for infrastructure projects.
“Policy continuity is the most important during this transition,” socioeconomic planning secretary Karl Kendrick T. Chua said on Thursday. “The best way to address some of these concerns is, as investors and analysts have mentioned, for the new administration to lay out its agenda so that people will understand better and alleviate any possible concerns that are being expressed.”
Economists predict that state budgets will remain tight beyond 2022. Last year, lower business rates lowered tax collection, driving the fiscal deficit to 8.5 percent.
In the final quarter of 2021, total government debt reached more than 60% of GDP, up from less than 40% before the epidemic.
“Authorities are banking on a pickup in economic activity to help contain this metric to 61% by year-end. But while we forecast growth and revenue collections will improve, we still expect both the deficit and overall debt levels to remain at dangerously elevated levels,” Makoto Tsuchiya of Oxford Economics wrote in a research note.
Marcos has promised to lower family expenditures by subsidizing rice and putting a price ceiling on basic foods. The average monthly deficit in this quarter was 106 billion pesos, nearly double the average of 55 billion pesos in 2019.
“While the additional fiscal spending would support the recovery, it would undoubtedly catch the attention of the major rating agencies,” Tsuchiya warned. The cost of financing for government projects would rise if global monetary conditions tightened and credit rating agencies downgraded the country.
The government aims for a GDP increase of 7% to 9% this year, and 6% to 7% in 2023 and 2024. Chua told reporters on Thursday that the Philippines was on pace to meet its 2022 goal, but that it will likely lose out on upper-middle-income country classification this year. As defined by the World Bank in 2021 as gross national income per capita of $4,046 to $12,535.
Manufacturing, wholesale and retail commerce, automobile repairs, and transportation and storage all contributed to first-quarter growth, according to national statistician Dennis Mapa.
Household consumption increased by 10.1 percent, while government spending increased by 3.6 percent. Imports were 5.3 percentage points higher than exports.
“This would guarantee that the Philippine ship remains strong, giving us resources to assist people with other difficulties,” he added.