A plateau-like trend is forecasted for the Philippines’ gross domestic product (GDP) rate for the second quarter of 2024, attributed by higher employment and government spending, an economist from the University of Santos Tomas (UST) suggested.

Carlos Manapat, UST economic department chairperson said the country’s economy, as measured by the GDP, would likely remain steady in the quarter ending June, and would most likely be pulled up by employment and government expenditures.

In the first quarter of this year, financial and insurance activities brought forth 10 percent impact on the economic output, followed by wholesale and retail trade at 6.4 percent.

Meanwhile, last year’s GDP rate in the second quarter weighed in at 4.3 percent.

Since GDP measures the market value consumption to determine the nation’s economic health, Manapat explained that the more jobs that are being filled up, more people will consume.

“The effect of an increased employment would sustain consumption. Like when we buy groceries, pay for gas, etc.,” he said in an interview with Manila Bulletin. “GDP is largely triggered by consumption. If there is employment, there is consumption like the industry expansion and lower loan rates.”

Additionally, the economist stated that government spending would drive up the GDP rate, given that these expenditures would allow timely execution of programs and projects made by various agencies to provide better services to the country.

Over the course of 11 months in 2023, the Department of Budget and Management (DBM) reported an 18.5 percent spike in government spending, from P861.8 billion to P1.02 trillion.

In the case of trading

The economist noted that while there are slight GDP improvements, the country is still facing trade deficit.

Earlier this month, the Philippine Statistics Authority (PSA) announced an annual decrease of 36.6 percent in the balance of trade in goods (BoT-G), amounting to $3.17 billion deficit last March.

While importation efforts slows down the GDP’s velocity, farm productivity and other manufacturing operations could be boosted through better technologies coming into the country.

“[If] we buy imported machineries, they will be taken to the Philippines, and will then improve manufacturing,” Manapat said as an example.

Concurrently, when asked about the current tension between the Philippines and China over the West Philippine Sea (WPS) especially on the fishing ban, he believed that this dispute should not pose any strains to the local fishing business.

“We have growing and catching, [whereas the latter pertains to WPS fishing]... The prohibitions would only put a slight effect on the overall fishing industry,” he clarified.

Manapat also said that as long as there is no external shocks like war that prohibits commodity trading, or the elevated issue on WPS, the GDP may rates may remain at a steady pace.