In spite of the second-quarter expansion registering lower than expected, the Department of Finance (DOF) said the Philippine economy remains strong and is on course to achieve its growth target for the year.

Finance Secretary Benjamin E. Diokno said the government's interventions to stimulate growth in the second half would make it feasible to achieve the full-year gross domestic product (GDP) target of six percent to seven percent.

“The Philippines’ 2023 growth target of 6.0 to 7.0 percent remains doable,” Diokno said at the Philippine Economic Briefing in Cebu on Friday, Aug. 11.

“To do this, we will expedite the implementation of government programs and projects, provide fiscal stimulus to increase the productive capacities of the public and private sectors and address the adverse impact of recent typhoons,” he added.

The economy recorded a modest growth rate of 4.3 percent from April to June, short of both the projected six percent growth rate by private analysts and the 6.4 percent GDP recorded in the first quarter of 2023.

According to data compiled by Bloomberg, the GDP growth rate in the second quarter, excluding the pandemic years of 2020 and 2021, was the slowest recorded since 2011.

“While our expansion was moderate relative to previous quarters, it remains robust,” Diokno said.

In order to meet the full-year goal target, the country's GDP would need to grow by at least 6.6 percent in the second half.

“The economic team is closely monitoring domestic and external developments and stands ready to make policy adjustments to ensure that we attain our medium-term growth targets,” the finance chief said.

The country’s growth was pegged at 5.3 percent in the first semester of 2023.

Also in the second quarter, the economy posted a setback with a contraction of 0.9 percent compared to the previous three months. This represents a significant shift from the earlier growth of one percent seen this year.

Furthermore, the decline marks the first time in nearly three years that the economy has experienced a quarter-on-quarter contraction instead of growth.

Notably, it is the largest drop since the onset of the Covid-19 pandemic in 2020, when there was a 13.8 percent decline.

In addition to elevated inflation and high-interest rates, the weaker GDP growth can be attributed to a significant decline in government spending during the quarter.

Public spending contracted by 7.1 percent, which is a reversal from the 6.2 percent growth observed in the first quarter and a notable decrease from the 10.9 percent growth recorded a year ago.