Philippine growth unexpectedly slows as inflation risks rise
The central bank has little room to support the economy because of peso weakness and surging consumer prices
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[MANILA] Philippine growth unexpectedly slowed in the first quarter, making the country a laggard within the region and challenging policymakers trying to cool inflation and support the peso.
Gross domestic product rose 2.8 per cent in the January-to-March period from a year earlier, the Philippine Statistics Authority said on Thursday (May 7). That’s lower than the 3.3 per cent median forecast in a Bloomberg News survey and below the 3 per cent pace of the previous quarter.
Investment fell 3.3 per cent in the quarter, and industrial production edged down 0.1 per cent. Consumer spending rose 3 per cent from a year earlier, while government spending gained 4.8 per cent.
There was no immediate reaction in Philippine stocks, which were trading about 2 per cent higher amid a regional rally.
The disappointing data underscores the damage caused by rising energy costs due to the Middle East conflict, with the economy already struggling after a corruption scandal led to a drastic slowdown in public investment and private consumption.
The central bank, which last month raised interest rates, has little room to support the economy because of peso weakness and surging consumer prices.
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The US conflict with Iran has spiked oil prices globally, but the Philippines is particularly affected because it imports nearly all of its oil requirements from the Middle East. The quarterly growth reading lagged that of neighbours such as Indonesia, Malaysia and Vietnam.
Before the war erupted, the Philippines had already been rocked by revelations that billions of US dollars in public funds meant for flood-control projects had been misused. That led 2025 growth to slump to 4.4 per cent, the weakest pace in more than a decade outside the pandemic. BLOOMBERG
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