Phl economy down, inflation up in Q1
MANILA — The Philippine economy stayed in recession in the first quarter as expected, making official intuitions that what was once Southeast Asia’s fastest growing is set to crawl back to prosperity in the face of soaring prices, more infectious coronavirus variants and sluggish vaccinations.
Gross domestic product (GDP) shrank 4.2% yearon-year from January to March, worse than the 0.7% contraction a year ago when the pandemic had just started, government statisticians reported on Tuesday.
A lot of the bad turnout was simply a manifestation of the drastic changes the virus imposed in just a year— while in 2020 the economy was in full throttle in January and most of February before the health crisis emerged, this year businesses and consumers have had to live with COVID-19 and its restrictions, from curfews to capacity limitations in shopping malls and public transport.
Unlike last year as well, inflation is fast becoming a problem in an already weakened
economy. Staggering pork prices pushed the price of basic goods and services by 4.5% in the first quarter, running above the central bank’s 2-4% annual target. The combo of stagnation and fast inflation meets the technical definition of “stagflation,” but Socioeconomic Planning Secretary Karl Kendrick Chua would not call it that just yet.
“Our targets are annual so we would not call it (stagflation) until the data justifies it,” he said in a briefing.
To be fair, there are
streaks of good data that came out with the already expected year-on-year contraction. First, there was a minimal 0.3% gain from the fourth quarter of 2020. The slump also moderated from 8.3% in the fourth quarter and 11.5% in the three months before that. On plot that looks set for a V-shaped recovery, but analysts, most of whom were expecting only a 3.4% slump last quarter according to Bloomberg, were careful to draw conclusions that the economy is on a mend.