Economic growth picks up, exceeds forecast in 2nd quarter

ABS-CBN News

Posted at Aug 17 2017 10:08 AM | Updated as of Aug 17 2017 02:29 PM

Workers continue construction on the Skyway Stage-3 project along Quirino Avenue. The Skyway extension, which will link the north and south expressways and decongest traffic in Metro Manila, is one of the key infrastructure projects of the government. Mark Demayo, ABS-CBN News

MANILA - (UPDATE 2) The economy grew 6.5 percent in the second quarter, picking up from the previous quarter and exceeding economists' forecasts as President Rodrigo Duterte moved to build P8 trillion in new infrastructure, official data released Thursday showed.

Gross domestic product grew at a faster clip in the April to June period compared to the 6.4 percent expansion in the first quarter, the Philippine Statistics Authority said.

Economists polled by Reuters expected the economy to have expanded 6.2 percent in the June quarter.

The Philippines maintained its status as one of Asia's fastest growing economies, overtaking Vietnam and Indonesia and second only to China, Socioeconomic Planning Secretary Ernesto Pernia said.

Pernia said government spending "stepped up" during the period while private sector spending "slackened."

"Think what could have happened if government and private sector" moved together, Pernia said, adding, "We need everyone and every sector to move in sync."

Data showed government spending grew 7.1 percent in the second quarter from 0.1 percent in the previous quarter while investment growth slowed to 8.7 percent from 10.6 percent.

Pernia said the economy was on track to meet the low end of the 6.5 to 7.5 percent goal this year. Duterte's economic team is targeting growth of 7 to 8 percent annually from 2018 to 2022.

Like its regional peers, the Philippines benefited from an improvement in global demand, with exports up nearly 14 percent in the 6 months to June.

Household consumption grew at slightly faster annual pace of 5.9 percent in the second quarter compared with 5.8 percent in the first, while government spending jumped 7.1 percent in a dramatic rise from the revised 0.1 percent gain in the March quarter.

The peso was steady after the GDP report, though markets remain focused on the currency's outlook following a sharp slide.

Policymakers have sought to soothe frayed nerves in the foreign exchange market after the peso hit an 11-year low, saying currency movements do not reflect the underlying strength of the local economy.

A construction boom in the Philippines has contributed to the peso weakening amid a recent surge in capital goods imports.

Indeed, Manila aims to lift growth to as much as 7.5 percent this year, from 6.9 percent in 2016, as President Rodrigo Duterte's administration prepares for a six-year, $180 billion spending spree on infrastructure.

The big spending plan to repair creaking infrastructure and build new roads, railways and airports form part of an ambitious effort by Duterte to boost growth in the $290 billion consumption-reliant economy to around the 8 percent level.

"We are optimistic that the accelerated state spending and project implementation would keep the Philippines in the club of Asia's fastest-growing economies," Finance Secretary Carlos Dominguez said in a statement.