MANILA The Philippine economy grew at its slowest pace in more than a year in the first quarter on weaker government spending, but strong exports and domestic consumption suggest the Southeast Asian country remains poised to raise rates this year.
"The changing of the guard of the government and the reorientation of programs really take time to settle and this slowed government spending for the quarter", Socio-Economic Panning Secretary Ernesto Pernia said.
"Our first quarter performance bodes well for the economy as it is broadly in line with this year's government target of 6.5-7.5 percent".
Compared with other major emerging economies in Asia, Pernia said the Philippines remains one of the "strongest performers". "We are somewhat downcast because we were expecting something around the mid-growth range of 6.5 percent to 7.5 percent".
Pernia said the slowdown could be explained by the absence of election spending, which boosted growth a year earlier. India has yet to release its data.More news: Japan princess to wed, sparking debate on shrinking royal family
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The services sector had the highest contribution to the growth of the country's growth domestic product in the first quarter with 3.8 percentage points, followed by the industry sector with 2.1 percentage points while the agriculture sector contributed 0.5 percentage point.
Also, it is second only to China - which increased 6.9 percent in the January to March period. On a quarter-over-quarter basis, the economy grew a seasonally adjusted 1.1%.
"To sustain the growth momentum of exports, it is important to ease government regulation, strengthen market intelligence gathering with the help of the private sector, and maximize trade agreements and economic groupings, especially with our ASEAN neighbors", he said.
"This was better than during the previous administration where government consumption, spending and public construction contracted by about 15 percent and 37 percent, respectively", Pernia said.