Philippine economy grew only 4.3% in 2nd quarter

Achieving economic growth of 7% this year has gotten much more challenging for the Philippines as the economy grew by only 4.3% in the 2nd quarter of 2023, according to a GMA Network news report.

To put things in perspective, posted below is an excerpt from the GMA news report. Some parts in boldface…

The Philippine economy continued its downtrend as it grew at a slower pace in the second quarter of 2023 — its slowest pace in nine quarters since the country entered the positive territory in the middle of 2021 following a pandemic-induced recession— amid high inflation that tempered consumption during the period, the Philippine Statistics Authority (PSA) reported on Thursday.

The economy, as measured by gross domestic product (GDP) or the total value of goods and services produced in a specific period, grew by 4.3% during the April to June 2023 period, PSA chief and National Statistician Claire Dennis Mapa said at a press conference.

This is slower than the 6.4% growth rate seen in the first quarter of the year and far slower than the 7.5% GDP growth seen in the same quarter last year. Quarter-on-quarter, it posted a decline of -0.9% during the period.

This also marks the fifth straight quarter of deceleration for the country’s GDP, and its slowest footing in nine quarters since it exited the pandemic-induced recession in the second quarter of 2021.

The economy was pulled out of recession in the April to June period of 2021 with a GDP growth rate of 12%.

The second quarter print brought the year-to-date economic growth rate at 5.3%, according to Mapa.

To achieve the government’s 6% to 7% target, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said the economy “needs to grow by 6.6% in the second half.”

“Notwithstanding the challenges, we believe this is still attainable,” Balisacan said, reading the joint statement of the economic team.

The country’s chief economist earlier floated that the second quarter GDP growth is expected to “further moderate.”

High inflation, interest rates – The slower growth came amid a still high inflation environment and the consequential costly interest rates to temper rising prices.

As of the first half of the year, inflation or the rate of increase in the prices of goods and services clocked in at 7.2%, still far above the government’s comfortable ceiling of 2% to 4%.

To tame inflation, the Bangko Sentral ng Pilipinas (BSP) raised monetary policy rates by a cumulative 425 basis points since May last year.

“For the second quarter, the moderate economic expansion was driven by increases in tourism-related spending and commercial investments, but was tempered by high commodity prices, the lagged effects of interest rate hikes, the contraction in government spending, and slower global economic growth,” Balisacan said.

Notably, Household Final Consumption Expenditure (HFCE) contracted by 0.1% quarter-on-quarter. Likewise, Agriculture, Forestry, and Fishing posted a quarter-on-quarter decline of -0.97% in the second quarter. Industry and Services sectors also saw contractions of 0.7% and 1.02%, respectively, during the period

Let me end this piece by asking you readers: What is your reaction to this recent development? What do you think must be achieved to boost economic growth for the rest of 2023? Do you think the Philippine economy will achieve growth of at least 6% by the end of this year?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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