Photographer: Taylor Weidman/Bloomberg

Philippine Growth Misses Forecasts as Government Spending Eases

Updated on
  • First-quarter growth was 6.4%, median estimate was 6.6%
  • Government spending growth slid to 0.2 percent from year ago

The Philippine economy expanded less than economists forecast last quarter as government and consumer spending weakened. Stocks and the peso fell.

Key Points

  • Gross domestic product increased 6.4 percent from a year earlier, the Philippine Statistics Authority said in Manila Thursday, after expanding 6.6 percent in the fourth quarter
  • The median estimate of 14 economists surveyed by Bloomberg was for growth of 6.7 percent
  • Compared with the previous quarter, GDP rose 1.1 percent compared with the 1.5 percent economists had forecast

Big Picture

The slowdown in government spending signals that President Rodrigo Duterte is struggling to kickstart his ambitious $180 billion infrastructure plan, which the World Bank has said would be the main driver of economic growth this year and next. While expansion is still among the fastest in the world, it is the weakest since 2015.

The economy faces other risks including the approval of changes to tax laws aimed at raising revenue needed to keep the budget deficit under control. A weaker peso is also boosting the cost of imports and fanning price pressures with inflation reaching the highest level since 2014.


  • Stocks dropped as much as 1.4 percent
  • The peso fell 0.2 percent to 49.85 per dollar

Economists Takeaways

  • “It is casting a shadow of doubt on the growth momentum, but it can easily be remedied if the government spends,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. “Investors are also looking at the tax bill as the next milestone, because you need funds to pay for these projects.”
  • “The headline number was a little bit disappointing but we have expected some normalization of economic growth, which is not necessarily a bad thing as it minimizes the overheating risk in the economy,” said Gundy Cahyadi, an economist at DBS Group Holdings Ltd. in Singapore. “Government spending was slow; there is a need to accelerate spending to bolster growth.”

Other Details

  • Consumer spending, which makes up about 70 percent of GDP, gained 5.7 percent from a year earlier, the weakest pace since 2014, according to data compiled by Bloomberg
  • Government spending rose 0.2 percent, the weakest pace in two years, according to data compiled by Bloomberg
  • Investment increased 7.9 percent
  • Mining fell 20 percent
  • Manufacturing rose 7.5 percent

— With assistance by Clarissa Batino, and Ditas B Lopez

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