Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group assess the recently published Q1 GDP figures in the Philippines.

Key Takeaways

“The Philippines’ economy grew by 6.4% y/y in 1Q23 (4Q22: revised down to +7.1% from +7.2% previously), slightly better than our estimate and Bloomberg consensus of 6.2%. Nonetheless, it marked the second quarter of growth deceleration and the slowest expansion post pandemic since 2Q21, reflecting the normalisation of economic activities that were associated with monetary policy tightening.”

“There was mixed performance across all sectors in 1Q23, with services sector remaining the key growth driver, followed by construction and manufacturing industries. Higher government spending and total investment as well as stock replenishment activities helped to cushion the persistent moderation in household consumption and a drag from net trade during the quarter.”

“In view of lingering downside risks to domestic growth prospects and that 1Q23 GDP outturn is not too far off our expectations, we maintain our 2023 full-year economic outlook for the Philippines at 5.0% (official est: 6.0%-7.0%, 2022: +7.6%). We continue to expect real GDP growth to decelerate further over the next few quarters with year-ago high statistical base effects also playing an important role.”