MANILA -- (UPDATE) Philippine economic growth slowed further in the April to June period to its lowest in 17 quarters, dragged by the delay in the passage of the budget that hit state spending, officials said Thursday.
Gross domestic product grew 5.5 percent in the second quarter, from 6.2 percent during the same period in 2018 and 5.6 percent in the previous quarter. This compared with the median forecast of 5.9 percent in separate polls by Bloomberg and Reuters.
"The weak economic performance during the second quarter is the continuing effect of that delay in the passage of the 2019 budget, coupled with the election ban," Socioeconomic Planning Secretary Ernesto Pernia Jr said.
"This growth slowdown serves as a challenge to all of us," he said.
Growth would have been 1 percentage point higher in the second quarter and in the first quarter had spending been on track, said Undersecretary Rosemarie Edillon of the National Economic Development Authority.
Lackluster growth puts pressure on the Bangko Sentral ng Pilipinas to resume interest rate cuts during a policy meeting later Thursday. Economists polled by Reuters predicted a 25-basis point reduction in the overnight borrowing rate used by banks to price loans.
Pernia said lawmakers should ensure the early passage of the 2020 passage as well as the second tranche of tax reforms to ease investors' worries. He said the validity of the 2019 budget should be extended.
He also attributed the growth slowdown to El Nino which hit palay and corn output and the water crisis in Metro Manila, which weighed on consumer confidence.
Pernia said the Philippines needed to grow by an average of 6.4 percent in the second half to meet its 6 to 7 percent target for the full year.