The Philippine economy shrank by more than expected in the first quarter of 2021, supporting views that the central bank will keep interest rates at a record-low at a policy meeting slated for May 12.

A policeman (right) monitors people at the entrance to a neighbourhood under strict quarantine measures in Pasay City, suburban Manila (Photo: AFP)

The Philippine statistics agency revealed on May 11 that gross domestic product fell 4.2 percent in the first quarter against the same period last year, marking the fifth straight quarter of declines amid pandemic-induced lockdowns.

Economists had expected the GDP to contract 3 percent in this quarter.

Among the major economic sectors, agriculture declined by 1.2 percent while services and industry contracted by 4.4 percent and 4.7 percent, respectively.

On the demand side, household consumption shrank 4.8 percent, but government spending grew 16.1 percent.

The economy's performance, however, grew 0.3 percent from the previous quarter on seasonally adjusted terms.

Secretary of the National Economic and Development Authority Karl Chua said at a briefing that the country's strong economic position before the pandemic and improving economic data in recent months show that the country’s economy is on the mend.

The Philippine central bank is projected to keep its benchmark interest rate unchanged at a record low of 2.0 percent for the rest of 2021, despite high inflation breaching its 2-4 percent target band.

Source: VNA