MANILA — The Philippine economy grew by 5.7 percent in the first quarter of the year, faster than the 5.5 percent growth in the previous quarter, amid stubbornly high inflation and elevated borrowing costs, the Philippine Statistics Authority (PSA) reported Thursday.
The first quarter gross domestic product (GDP) growth, however, fell short of the government's target for the period and slower than the 6.4 percent expansion in the same three months in 2023.
The Marcos administration has set its GDP growth target at 6 to 7 percent for this year.
“From the start of the year, we’ve been experiencing shocks,” Secretary Arsenio Balisacan of the National Economic and Development Authority said.
Some analysts said chasing a 6-percent growth would be difficult for the Philippines as long as interest rates remain high.
READ: Gov’t cuts economic growth target for 2024
So far, the Bangko Sentral ng Pilipinas (BSP) has kept its key rate unchanged at 6.5 percent, the highest in almost 17 years. Governor Eli Remolona Jr. now expects borrowing costs to remain higher for a longer period as stubbornly high inflation prevents the central bank from cutting rates sooner.
The Monetary Board, the highest policymaking body of the BSP, will hold its next rate-setting meeting on May 17, with the market widely expecting the central bank to maintain its ultra-tight monetary policy.
READ: Impact of high interest rates to ‘peak’ in 2024 —BSP
A high-interest rate environment can hurt consumption, which has already been battered by fast-rising consumer prices. This prompted the Marcos administration to cut its GDP growth target this year to 6 to 7 percent, from 6.5 to 7.5 percent previously.
According to the PSA, the main contributors to the first quarter of 2024 growth were: financial and insurance activities, 10 percent; wholesale and retail trade; repair of motor vehicles and motorcycles, 6.4 percent, and manufacturing, 4.5 percent.
All major economic sectors —agriculture, forestry and fishing, industry, and manufacturing — posted year-on-year growths of 0.4 percent, 5.1 percent, and 6.9 percent, respectively.