The government remains confident of the six percent to seven percent target rate by the year-end, the National Economic and Development Authority (NEDA) said.

NEDA Secretary Arsenio M. Balisacan said the slowdown in the second quarter could be offset by fiscal spending in the third quarter, addressing the underspending in some government agencies.

“We have put in place and already catching up strategies for various agencies and that should address that issue and hopefully what we lost in terms of government expenditures contribution in our gross domestic product (GDP) in the second quarter will be regained in the third quarter and fourth quarter,” Balisacan said in an interview with ANC.

Asked what government agencies to give a boost for expenditures, the NEDA chief cited the Department of Public Works and Highways, the Department of Transportation, the Department of Social Welfare and Development (DSWD), and the Department of Education.

Balisacan added that despite cuts in economic outlook growth from the private sector, the country’s growth is not heavily reliant on the GDP.

“I dont think that a big part of economic growth is very much domestic, three-fourths of our growth coming from the domestic demand, at least in the demand side, and the supply side here is almost 63 percent of that growth is coming from the services sector,” he further said.

He said that inflation is the major challenge for the country’s economic growth, saying that it impacts the domestic demand and monetary policies such as raising interest rates,

Headline inflation increased to 5.3 percent in August from 4.7 percent in July, which is still higher than the government's two percent to four percent target for this year.

This is mainly due to increasing prices in agricultural commodities where rice inflation surged to 8.7 percent in August from 4.2 percent in July; while inflation for vegetables reached 31.9 percent in August from 21.8 percent a month before.

Amid the uptick, Balisacan reported that the fast recovery from typhoons and floods still provided adequate rice production by the end of the year, which was higher than the earlier estimates.

He also added that vegetable losses could also recover from its losses as its production cycle is short, therefore lessening the inflationary pressures.