(CNN Philippines) — The country’s economy grew slower in the first three months of the year compared to the same period in 2014, according to figures from the Philippine Statistics Authority (PSA) released today (May 28).
The Philippine gross domestic product (GDP) expanded by 5.2% in the first quarter of 2015, lower than the 6.6% growth registered in the previous quarter and the 5.6% expansion in the first three months of 2014.
It is the lowest growth rate observed since the 3.7% expansion in the last three months of 2011.
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In a statement, Economic Planning Secretary Arsenio Balisacan, director general of the National Economic and Development Authority (NEDA), said that the first quarter growth is lower than what the government and the market had expected.
He attributes the slowdown to a “slower-than-programmed” pace of public spending, particularly the decline in public construction. “Apart from the normal first quarter delays in government spending, the recent uptick in disbursements from the Department of Budget and Management has not yet been reflected in the national income accounts.”
In a statement, the PSA said that services sector was the main driver of the GDP growth, having notched a 5.6% rise. Nevertheless, it is still lower than the 6.8% growth registered last year. The industry sector accelerated 5.5% from 2014’s 5.4%, while the agriculture sector rose 1.6% from 0.6% last year.
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Balisacan remains optimistic for the rest of the year.
“Despite this lower-than-expected growth, it is reasonable to believe that the economy will grow at a faster rate in the remaining quarters,” he said. “Private sector economic activity remains vibrant, with private construction registering a double-digit rise of 14.2 percent for the quarter and private investments in durable equipment rising by 14.3 percent.”
The recent business confidence index from the Bangko Sentral ng Pilipinas (BSP) revealed bullish prospects for the second quarter of 2015. The next quarter confidence index surged to 58.2% from the previous survey’s 43.1%.
Consumer confidence also improved in the first three months of 2015. The overall confidence index rose by 11.8% from the previous month, according to the BSP’s latest Consumer Expectations Survey. Nevertheless, it still remains in negative territory at -10%.
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The services industry gave the highest contribution to the first quarter’s 5.2% GDP growth, with 3.1 percentage points. On the other hand, industry and agriculture contributed 1.9 and 0.2 percentage points, respectively.
“The growth performance in this quarter tells us that there are still issues that the government needs to confront in order to maintain the high level of confidence that the business sector is showing and entrusting the country,” Balisacan said.
“Therefore, we are keeping a careful watch over the spending performance of the agencies to ensure that implementation bottlenecks are being addressed and the execution of programs and projects will not be further delayed.”
