Philippine GDP up 7.4 percent in second quarter but growth slowing

ABS-CBN News

Posted at Aug 09 2022 10:15 AM | Updated as of Aug 09 2022 02:27 PM

Members of the media look at the BGC Urban Farm in Taguig on March 24, 2022 set up by in conjunction with the local government and advocacy groups to promote urban farming. Jonathan Cellona, ABS-CBN News
Members of the media look at the BGC Urban Farm in Taguig on March 24, 2022 set up by in conjunction with the local government and advocacy groups to promote urban farming. Jonathan Cellona, ABS-CBN News

MANILA (UPDATE) - The Philippine economy continues its rebound, growing 7.4 percent in the second quarter, the state statistics bureau said on Tuesday.

This follows the revised 8.2 percent gross domestic product growth rate posted in the first quarter of the year.

The Philippine Statistics Authority said this was the 5th consecutive quarter of growth since the country went into recession during the height of the pandemic.

“Our growth figure of 7.4 percent of GDP sits comfortably at the higher end of our target band for the year. This is an impressive achievement, more so with the ongoing challenges of rising inflation worldwide and an uncertain global political economy,” Finance Secretary Benjamin Diokno said in a separate statement. 

The Philippine economy grew by 7.4 percent in the second quarter of 2022. Chart: ABS-CBN Data Analytics
The Philippine economy grew by 7.4 percent in the second quarter of 2022. Chart: ABS-CBN Data Analytics

Socioeconomic Planning Secretary Arsenio Balisacan said the Q2 growth rate was slightly lower than the 7.5 percent forecast for the period but was still the second-highest among the major economies of ASEAN.

“Our country is next to Vietnam’s 7.7 percent but faster than Indonesia’s 5.4 percent and China’s 0.4 percent,” said Balisacan who also heads the National Economic and Development Authority. 

Economic growth in Q2 in the ASEAN region. Chart: ABS-CBN Data Analytics
Economic growth in Q2 in the ASEAN region. Chart: ABS-CBN Data Analytics

However, economic growth also slowed from the first quarter, the PSA said.

"Sa seasonally adjusted national accounts, ang ikalawang quarter ng 2022, ang GDP ay nagtala ng pagbaba na -0.1 percent quarter on quarter," said National Statistician Dennis Mapa. 

(In the seasonally-adjusted national accounts, the second quarter 2022 GDP fell -0.1 percent quarter on quarter.)

"I think the global headwinds, particularly inflation, imported inflation, energy fuel and food contributed to the noticeable slowdown. But…we have taken into account such development in our revisited projection or target for the rest of the year," Balisacan said. 

The Q2 growth rate was also well below the 8.6 percent median forecast in a Reuters poll. 

ING Bank Senior Economist Nicholas Mapa said solid household consumption was likely offset by soft government spending, fading base effects and a deep trade deficit. 

He also warned that growth may further decelerate in the second half due to inflation rising interest rates and the government’s fiscal handicap.

But interest rate hikes, which could have a short-term effect on consumption, should be seen for their long-term benefits to the overall recovery, Balisacan said.

"I’d like to believe that the policy change will have a net positive effect on the economy," he said.

BPI Lead Economist Jun Neri said election-related spending in April and early May provided some output cushion. However, he said the growth rate could have been a lot faster if commodity prices had not surged from Feb to June.

Mapa added that only a small portion of election spending was included in the second quarter since the bulk has been accounted for in the first quarter.

Last year, the country's GDP growth rate rebounded to 12.1 percent after COVID-19 restrictions were slightly eased. In 2020, the economy shrank to a historic low of -16.9 percent as many industries and sectors were closed to curb the spread of the disease.

The PSA said second-quarter GDP growth was driven mainly by the expansion of wholesale and retail trade; repair of motor vehicles and motorcycles, construction, and transportation and storage.

“Major economic sectors, namely: Agriculture, forestry, and fishing, Industry and Services all posted positive growths in the second quarter of 2022 with 0.2 percent, 6.3 percent, and 9.1 percent, respectively,” the agency added.

The PSA also noted that household consumption grew by 8.6 percent, while government consumption grew 11.1 percent. Exports also grew but were still outpaced by imports. 

Economic managers are expecting GDP to grow between 6.5 to 7.5 percent this year, down from 7 to 8 percent amid rising inflation and interest rates. 

Balisacan credited the country’s strong growth to the opening up of the economy and the effective management of the outbreak. 

“For the remainder of the year, we must apply the same or even better risk-management protocols and protect the most vulnerable against high inflation and other shocks, and scarring due to COVID-19,” Balisacan said. 

He said growth "may not be as fast" in the second quarter but is still likely to hit the target of 6.5 to 7.5 percent for the year.

To achieve a cumulative 7.5 percent growth, the economy needs to grow by 7.2 percent in the second half of the year, he said. 

He said the government is committed to fully reopening the country including the return of face-to-face classes.

“Yes the road ahead is difficult, but it is surmountable,” he added. 

The PSA earlier reported that while the unemployment rate remained steady at 6 percent in June, more than half a million new Filipino workers had found jobs.

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