The Philippine economy grew slower than expectations, expanding by 6.4 percent in the first quarter, the Philippine Statistics Authority reported on Thursday.
It was the slowest phase of growth for the gross domestic product (GDP), since it registered at 6.3 percent in the fourth quarter of 2015.
Socioeconomic Planning Secretary Ernesto M. Pernia attributed the deceleration mainly to the absence of election-related spending. "Growth last year was high due to election spending, impact of which has already dissipated," he said.
"Changing of the guards of the government really took time to settle," the Cabinet official noted.
Pernia said government spending also came in at a slower pace in the first three months of the year.
Overall the economy was slower that what was desired ... "and, for this, we are somewhat downcast because we were expecting something around the midpoint of the growth range 6.5 to 7.5 percent," Pernia said.
Financial markets react
Frustrated by the GDP results, financial markets reacted with a negative note. The peso weakened and shares prices faltered during the morning trade.
COL Financial Vice President and head of research April Lyn Tan noted the declines were a direct reaction to the GDP results. "The market is reacting negatively with the lower-than-expected number," Tan said.
The peso opened 8 centavos weaker at P49.840:$1 from Wednesday's close of 49.760. "Essentially, the peso's decline was a reversal of its prior gain, which was due to initial expectations of strong GDP growth in the first quarter," Land Bank of the Philippines market economist Guian Angelo Dumalagan told GMA News Online.
Pernia, who last month said the economy likely grew by 7 percent in the first three months of the year, noted on Thursday the Philippines remains one of the strongest performers among the major emerging economies in Asia.
"For the first quarter, we overtook Vietnam and Indonesia which grew by only 5.1 percent and Thailand by only 3.3 percent. We are only second to China’s growth of 6.9 percent while India’s number hasn’t come out yet," Pernia told reporters during the press briefing on the National Accounts.
Pernia is adopting an optimistic view to things. "Moving forward, the domestic economy is poised to maintain growth momentum," he said.
"Government has also been busy laying down a strong foundation," he added, noting the administration plans to invest heavily in infrastructure.
The government intends to spend P8.2 trillion to finance the country's "golden age of infrastructure" over the next six years, with P860.7 billion allocated to big-ticket projects this year.
"Among the many reforms and programs are infrastructure spending as well as other government programs including capital development program," Pernia said.
"We expect construction activities and public spending to pick up sharply," he added. — with Ted Cordero/ VDS, GMA News