Explore the robust performance of Q1 economic growth, surpassing expectations and showcasing resilience. Discover the sector expansions, labor market improvements, and growth indicators driving the economy forward.

The first quarter of this year has showcased a remarkable performance, exceeding expectations and indicating a return to a high-growth trajectory despite prevailing challenges and headwinds. All major economic sectors exhibited expansions during this period, with agriculture, forestry, and fishing growing by 2.2 percent, industry by 3.9 percent, and services by 8.4 percent.

The positive performance of these sectors has translated into significant improvements in labor force statistics. Notably, the unemployment rate dropped from 5.8 percent in March 2022 to 4.7 percent in March 2023, accompanied by a decline in underemployment.

On a quarter-on-quarter basis, the economy expanded by 1.1 percent, primarily driven by growth in construction, manufacturing, and financial and insurance activities.

While this auspicious beginning for 2023 is encouraging, the economic team and the government remain vigilant. They are dedicated to implementing the social and economic transformation agenda while being prepared to address potential shocks and risks to the growth outlook, whether domestic or external, anticipated or unforeseen.

Given continued inflationary pressures and global headwinds, the government has set a GDP growth target of 6.0-7.0 percent for this year, slightly lower than the above-target result of 7.6 percent achieved in 2022. Analysts polled by the Times acknowledged that higher prices and interest rates may have subdued domestic consumption, resulting in varying forecasts of growth ranging from 4.7 percent to 6.8 percent.

The primary contributors to first-quarter growth, as identified by the PSA, were wholesale and retail trade and repair of motor vehicles and motorcycles (7.0 percent), financial and insurance activities (8.8 percent), and other services (36.5 percent).

On the demand side, household final consumption expenditure (HFCE) increased by 6.3 percent, while government final consumption expenditure (GFCE) grew by 6.2 percent. Gross capital formation expanded by 12.2 percent, while exports of goods and services and imports of goods and services saw more modest growth rates of 0.4 percent and 4.2 percent, respectively.

Gross national income (GNI) exhibited strong growth of 9.9 percent, and net primary income (NPl) from the rest of the world experienced a significant increase of 81.2 percent during the period.


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