PHL GDP growth estimated at 4.8% in Q1 on slowdown in consumption

GROSS domestic product (GDP) growth is estimated to have slowed to 4.8% in the first quarter as private consumption eased, Pantheon Macroeconomics said on Tuesday.

“Our current GDP forecast for the first quarter sees a sharp slowdown in growth, to 4.8% from 7.2% in the fourth quarter, with a moderation in consumption growth accounting for 70% of this drop,” Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco and Senior Asia Economist Moorthy Krshnan said in a report.

The 4.8% estimate is well behind the pace of the government’s growth target of 6-7% for this year, and represents a significant drop from the 7.6% expansion in 2022.

Pantheon also noted that the percentage of households with savings in the Philippines made “little visible progress” in the first quarter.

According to the central bank’s consumer expectations survey, the percentage of households with savings rose to 32.9% in the first quarter from 30.5% in the fourth quarter.

“But this appears mainly to have been a seasonal rise, prone to an immediate reversal. Indeed, the share was unchanged at 31.3% in Q1 on our adjustment, still well below the pre-pandemic peak of 39% in mid-2019,” Pantheon Macroeconomics said.

“Persistently strong private consumption growth at the 8%-plus average rates seen last year is unsustainable with household balance sheets still this fragile. And we’re already starting to see a clear evaporation in momentum,” it added.  

Domestic consumption growth rose 7% in the fourth quarter, bringing full-year household consumption growth to 8.3%. 

Consumers were less pessimistic in the first quarter, the central bank has said, as reflected in the 10.4% decline in the consumer confidence index in the first three months, as against the 14.6% drop in the previous quarter.

The erosion of consumer confidence was, however, in its 11th consecutive quarter, following the 54.5% drop in the third quarter of 2020.

The Philippine Statistics Authority is scheduled to release first-quarter GDP data on May 11. — Keisha B. Ta-asan