1Q 2024 PH GDP Report: Economy expands at a moderate pace 

The Philippines’ Gross Domestic Product (GDP) for the first quarter of 2024 grew at a faster pace by 5.7% year-on-year (YoY) versus the 5.5% growth recorded in the 4th quarter of 2023 as sticky inflation and the high interest rate environment dampened the growth in consumer spending and investment spending. Philippines’ Q1 2024 GDP print came out lower than the 5.9% Bloomberg consensus estimate, though above our forecast of 5.6%.

According to National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan, the moderation in economic activity, especially on household consumption was due to the effects of the El Niño phenomenon, which consequently affected the growth in the services sector. He also cited the lower business confidence for the first quarter, stemming mainly from the abovementioned downside risks to growth and other economic indicators for investment.

We are retaining our 2024 full-year average GDP forecast at 6.0% on the back of the anticipated policy rate cuts by the Bangko Sentral ng Pilipinas (BSP) in the last quarter of the year and the relatively lower yet still elevated inflation, which is seen to average at 4.0% this year (revised from 4.3%↓). Keeping track of the subdued inflation and a lower interest rate environment will help stimulate growth in consumer and investment spending on peso government securities and more.