The Department of Finance (DOF) said the Philippines maintains its position as the fastest-growing economy in Southeast Asia, surpassing its regional peers despite the second-quarter slowdown.

Finance Secretary Benjamin E. Diokno said the country’s gross domestic product (GDP) average growth of 5.35 percent in the first half of the year outpaced major economies in the Association of Southeast Asian Nations (ASEAN).

Diokno's assertion is supported by the growth reports released by six ASEAN members for the January to June period.

Indonesia follows closely behind the Philippines with a GDP growth rate of 5.1 percent, while Malaysia recorded a 4.25 percent expansion.

Meanwhile, Vietnam, Thailand, and Singapore recorded more modest growth rates of 3.7 percent, 2.2 percent, and 0.55 percent, respectively.

Diokno said the Philippines' ability to sustain its economic momentum amid global uncertainties is a testament to its resilience and robustness.

“Our first-semester performance for 2023, which is the highest in ASEAN-6 among those that have released their data, indicates that the economy is normalizing and poised for faster expansion,” Diokno said.

The economy recorded a modest growth rate of 4.3 percent in the second-quarter, short of the 6.4 percent GDP recorded in the first quarter of 2023.

The Marcos administration has set a target of achieving a 6.0 percent to 7.0 percent growth for 2023. To meet this goal, the country’s GDP would need to expand by at least 6.6 percent in the second half of the year.

Diokno expressed confidence that the 6.6 percent growth required to reach the lower end of the target range is attainable.

He cited several factors that contributed to his optimism, including improved business confidence, a deceleration in inflation, a stronger employment situation, and increased infrastructure investment.

“In view of such promising prospects, the Philippines is more than determined to deliver,” Diokno said. “Many indicators, including our improving business environment, show that this [6.6 percent growth] is doable.”

The Business Expectations Survey conducted by the Bangko Sentral ng Pilipinas earlier indicated that business confidence improved in the second quarter.

It was driven by increased sales and production, ongoing economic recovery, full reopening of the economy, seasonal uptick in demand, and a consistent deceleration of consumer prices.

Inflation fell for the sixth consecutive month in July, dropping to 4.7 percent from 5.4 percent in June.

“The sustained decline strongly supports the likelihood that inflation could be within our 2.0- to 4.0-percent target range by the fourth quarter of this year, and near the lower end of the target in the first quarter of 2024,” Diokno said.

Moreover, the DOF chief said the local jobs market is recovering strongly.

Unemployment eased further from 6.0 percent last year to 4.5 percent last June. The employment rate remained high at 95.5 percent, while the labor force participation rate increased both year-on-year and month-on-month.

“These improvements translate to approximately 48.8 million employed individuals in June 2023,” Diokno said.

Over the medium term, Diokno said the Philippines is determined to cover all bases for a strong and inclusive economic recovery.

“This requires a smart and fiscally prudent investment strategy targeting high-impact areas such as infrastructure, digitalization, and human capital development,” he said.

“These strategic priorities will be the main engines driving our rapid and sustainable growth for the next five years,” Diokno added.

The Philippine economic team is determined to keep infrastructure spending at 5.0 percent to 6.0 percent of GDP as set in the country’s first-ever Medium-Term Fiscal Framework.