Steady GDP Trend, But Details Point To Slowing Domestic Demand

Philippines Q1 GDP rose 1.3% q/q, against a 1.0% forecast and prior 2.1% read. The y/y pace was a touch below expectations at 5.7% (5.9% forecast) but still showed improvement on the Q4 outcome of revised 5.5% increase.

• The trend around growth looks reasonably steady, although the detail suggests the weight of earlier policy tightening is starting to bite.
• Private consumption rose 4.6% in y/y terms, but this was down from the 5.3% pace seen in Q4. In q/q terms we were down sharply. Back in Q1 2022 consumption growth peak at 10% y/y.
• Investment spending also slowed sharply to 2.3% q/q from 10.2%. The biggest drag came from durable equipment (off -4.8% y/y) but construction investment also slowed to 6.8%y/y from 10.1%.
• Positive offsets came from higher government spending (+1.7%y/y, from -1.0%). Exports also recovered strongly to +7.5% y/y (from -2.5% y/y in Q4 last year).
• Officials noted that the country can still achieve this year's growth target of 6-7%, which was recently revised down from 6.5-7.5%.
• It also comes ahead of the next week's BSP decision. Today's result coupled with lower April CPI should leave the central bank firmly on hold. It is still likely to be too early for dovish pivot given external developments.