MANILA — In the first quarter of 2019, the Philippine economy grew by 5.6 percent, lower than the 6.5 percent registered in the same quarter of last year and 6.3 percent of the previous quarter.
This is due to the huge drop in government expenditure growth to 0.08 percent (in nominal terms) compared with 25.4 percent in the same period last year, the Department of Finance (DOF) said in its latest Economic Bulletin released on Monday.
From the expenditure side, the lower growth can be traced to a moderated growth in both government consumption and capital formation/investment, which grew by 7.4 percent and 6.8 percent respectively, compared to 13.6 percent and 10.3 percent in the same quarter of last year.
The slowdown in capital formation is explained by the significant contraction in public construction by 8.6 percent compared to 22.6 percent growth in the same quarter of 2018. This is slightly tempered by 8.6 percent growth in private construction compared to 8.1 percent in the same quarter of 2018.
From the supply side, agriculture has decelerated to 0.8 percent in the first quarter. This confirms that El Niño has affected the sector.
Industry also slowed, weighed down by mining and quarrying, slowdown in manufacturing activities, and construction. Note that growth in manufacturing and construction are much lower than GDP’s.
Government economists concluded by saying that underspending of PHP69.5 billion in the first quarter of the year reduced GDP growth by 1.6 percent of GDP. This was offset by election spending of candidates and lower consumer inflation by the combined impact of about 0.7 percent of GDP, boosting household consumption by 6.3 percentin real terms.
If the budget were approved as scheduled and disbursements were made promptly, GDP growth in the first quarter would have risen to 7.2 percent.
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