Q1 GDP revised upward to -3.9%

MANILA, Philippines — The Philippine economy contracted at a softer pace of 3.9 percent in the first quarter, the Philippine Statistics Authority (PSA) reported yesterday.

The PSA said the country’s gross domestic product (GDP), a measure of economic output, shrank by 3.9 percent in the January to March period, smaller than the 4.2 percent reported in May.

Still, it marked the fifth straight quarter of economic decline, extending the recession in a country in dire need of recovery from the pandemic.

The PSA and the National Economic and Development Authority will announce today the second quarter GDP performance. Economists expect a strong GDP growth largely due to low base effects.

According to the PSA, the major contributors to the revision were professional and business services with a contraction of 4.4 percent from 6.5 percent earlier.

Construction also declined at 22.6 percent from the previously reported 24.2 percent. The same with real estate and ownership of dwellings at 11.7 percent from a 13.2 percent drop in May.

Net primary income from the rest of the world and gross national income also both saw upward revisions to declines of 75.6 percent and 10.6 percent, respectively.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the upward revision could be attributed to faster infrastructure spending and more accommodative monetary policy by keeping rates unchanged at record lows.

“This is in terms of relatively lower borrowing and financing costs that help spur greater demand for loans and credit. These may have positive economic effects on some businesses, including construction and real estate and property,” Ricafort said.

“Measures to further reopen the economy in the first quarter may have also contributed to the upward revision in terms of higher capacity for some businesses, including those in the services sector and other activities with person-to-person business interaction,” he said.

Ricafort also noted the start of COVID-19 vaccination in March that helped boost confidence by businesses and consumers alike.

GDP adjustments are regularly done as a consideration to the late release or updates of some pertinent data. It is also consistent with international standard practices on national accounts revisions.