The International Monetary Fund had expected the Philippine economy to have expanded by 6 percent in the first quarter on account of robust household consumption and government spending.
Shanaka Peiris, IMF resident representative to the Philippines, said that based on their preliminary assessment, strong domestic consumption and public-sector investments more than offset the adverse impact of anemic exports on the economy’s growth in the first three months of the year.
The government will release on May 30 the official report on the Philippine economy’s performance for the first quarter. In the first quarter of 2012, the economy grew by 6.3 percent.
Peiris said the rising remittances from overseas Filipinos likely boosted household consumption, which has been a key growth driver of the economy.
For the full year, the IMF projected remittances to the Philippines to grow by another 5 percent from the $21.4 billion recorded in 2012. The forecast was anchored on reports that a significant number of Filipinos continued to be deployed to jobs overseas.
“Remittances may be seen as slowing down [from a 6.3-percent growth last year], but we still see a 5-percent growth in remittances [for 2013], and that is still a good number,” Peris said.
Based on government estimates, at least 10 percent of Filipino households are partially or fully dependent on remittances sent by family members working abroad. Remittances are equal to about 10 percent of the gross domestic product (GDP).
Peiris likewise highlighted the government’s spending program, which he said continued to boost the economy’s growth. Government expenditures amounted to P430.8 billion in the first quarter, up 9 percent from a year ago, the Department of Finance earlier reported.
Peiris said the positive impact of rising domestic demand was expected to outweigh the effects of weak export revenues on the economy’s growth.
Philippine exports in the first quarter contracted by 6.2 percent to $12.08 billion due to anemic global demand, a result of weak economic performance of the United States, Europe and Japan.