The Philippine economy slowed in the second-quarter amid soaring consumer prices that weakened demand from both businesses and households, the government reported on Tuesday, Aug. 9.
Based on the Philippine Statistics Authority (PSA) data, the country’s economy, as measured by the gross domestic product (GDP), grew 7.4 percent in April to June, down from the 12.1 percent recorded in the same period last year.
The June quarter GDP was also slower compared with 8.2 percent in the first three months this year. Quarter-on-quarter, the economy declined by 0.1 percent.
“The slowdown may be due to inflationary pressures brought about by the Russia-Ukraine war, weakening global demand, and supply chain disruptions brought by lockdowns in China,” Socioeconomic Planning Secretary Arsenio M. Balisacan said.
In the second-quarter, inflation rose at a much faster pace to 5.56 percent, well above the government’s target range of 2.0 percent to 4.0 percent.
If inflation did not accelerate during the quarter, Balisacan believes the growth “definitely would be better.”
Based on the PSA data, household final consumption expenditures in the second quarter dropped 2.7 percent from its end-March’s level due to weak spending on transport, restaurant and hotels, as well as food and non-alcoholic beverage.
Services also weakened, declining 0.4 percent quarter-on-quarter. The drop was attributed to transportation and storage, human health and social activities, as well as real estate and ownership dwellings.
Inflationary pressures to economic output are expected to continue in the second semester of the year, Balisancan admitted.
But despite that, he said the government is confident that the country’s full-year growth would settle within the target band of 6.5 percent to 7.5 percent.
To attain the conservative target of 6.5 percent, the July to December GDP should grow 5.3 percent. Meanwhile, to hit achieve the upper end of the goal, the economy should expand 7.2 percent in the last six-months.
In the first six-months of the year, the economic growth averaged at 7.8 percent.
Meanwhile, Finance Secretary Benjamin E. Diokno said the economy was on a steady path to recovery and expansion, as demonstrated by the broad-based 7.4 percent GDP growth.
“All three major sectors—agriculture, industry, and services—posted positive growth rates despite the increase in international commodity prices, indicating a rebound in overall economic activity,” Diokno said.
According to PSA, the services sector grew the highest at 9.1 percent followed by industry at 6.3 percent; and agriculture, forestry, and fishing at 0.2 percent.
“Private domestic demand likewise expanded with household consumption (8.6 percent growth rate) and gross capital formation (20.5 percent growth rate) providing robust support to the economy, Diokno added.
He said the strong growth in the second quarter reflects the increase in mobility, better labor conditions, and government’s support to growth.
The robust economic performance for the second quarter remains within the Development Budget Coordination Committee’s GDP growth target of 6.5 to 7.5 percent for 2022.
“Our growth figure of 7.4 percent of GDP sits comfortably at the higher end of our target band for the year. This is an impressive achievement, more so with the ongoing challenges of rising inflation worldwide and an uncertain global political economy,” said Diokno.