NextGen Day

Manila, Philippines – The growth rate of the Philippine economy moderated to 4.3% in the second quarter of the year, down from the 6.4% expansion observed in the preceding quarter, according to the Philippine Statistics Authority (PSA) report released on Thursday.

During a briefing, Dennis Mapa, the National Statistician, conveyed that the gross domestic product (GDP) growth in the quarter also fell short of the 7.5% expansion achieved in the second quarter of 2022.

The country’s year-to-date economic growth has settled at 5.3%.

In a joint statement delivered by National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan during the briefing, the economic team explained that the contributing factors to the slowed growth in the quarter included the repercussions of interest rate hikes, inflation, and a moderate decline in government spending.

The nation’s economic team comprises NEDA Secretary Balisacan, Department of Budget and Management (DBM) Secretary Amenah Pangandaman, and Finance Secretary Benjamin Diokno.

“The second quarter’s moderate economic expansion was fueled by increased tourism-related spending and commercial investments. However, these were countered by high commodity prices, the lagged effects of interest rate hikes, government spending contraction, and sluggish global economic growth,” the economic team stated.

All major economic sectors – including agriculture, forestry, fishing, industry, and services – reported positive growth in the second quarter of 2023, with growth rates of 0.2%, 2.1%, and 6%, respectively.

The household final consumption expenditure growth reached 5.5% on the demand side.

Exports of goods and services witnessed growth of 4.1%, while imports of goods and services inched up by 0.4%.

Nonetheless, the government’s final consumption expenditure (GFCE) and gross capital formation contracted by 7.1% and 0.04%, respectively.

“While government expenditure contracted by 7.1% due to the absence of election-related spending in the first half of the year, government spending is expected to gain momentum in the coming quarters to help recover our growth momentum,” the economic team assured.

The Growth Target Remains Attainable.

Despite the second-quarter slowdown, the economic team maintains that this year’s annual economic growth target remains feasible.

“To achieve the target growth rate of 6-7% for the year, the country’s GDP needs to grow by at least 6.6% in the second half of 2023. Despite the challenges, we believe this is still attainable,” the economic team affirmed.

To realize this goal, the government will expedite the execution of programs and projects, including enhancing the delivery of public services as outlined in the 2023 national budget.

The economic team revealed that the Economic Development Group (EDG) has been actively exploring ways for various government agencies to fast-track the implementation of these initiatives throughout the remainder of the year.

Government entities at both local and regional levels are directed to create catch-up plans and accelerate or frontload the execution of programs and projects.

The economic team also outlined ongoing fiscal stimulus endeavors aimed at boosting the productive capacities of both the public and private sectors.

The economic team suggested immediately utilizing the Quick Response Fund and other disaster-related budgetary mechanisms to address the aftermath of recent typhoons and monsoon rains.

While inflation has already decelerated, the economic team confirmed the continuation of supply-side interventions and demand-side management measures to uphold price stability amidst potential risks such as weather disturbances, El Niño, trade tensions, and export bans in other countries.

“The positive trend in inflation aligns with the potential for lower interest rates, opening avenues for increased activities among businesses, households, and the broader private sector. The government will also heighten its targeted actions to alleviate the impact of high inflation on vulnerable sectors,” the economic team asserted.

The government will vigilantly monitor the repercussions of the global economic slowdown and engage in further discussions with sectors likely to be influenced.

Undeterred by the economic challenges in 2023 and 2024, the economic team affirmed the government’s preparedness to make policy adjustments, ensuring the realization of the growth target.

“We remain steadfast in our belief that the prospects for the Philippine economy are robust and positive. Our economy has demonstrated resilience during the most challenging times of the pandemic. Now, we are better equipped and more resilient to navigate the array of risks and challenges, both domestic and global,” the economic team concluded.

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Amidst economic fluctuations, the Philippine economy maintains a growth trajectory despite challenges. The collaborative efforts of the government and its economic team are evident in their commitment to attaining the growth target. A strategic combination of policy adjustments, enhanced implementation of programs, and proactive measures are set to propel the nation toward economic resilience and stability.

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