The economy recorded a faster growth in the second quarter of the year driven by robust construction activities.
The Philippine Statistics Authority (PSA) yesterday reported the economy expanded by 6.3 percent in the second quarter of 2024, faster than the 4.3 percent increase recorded in the same period in 2023, as well as the 5.8 percent annual increase in the first quarter of the year.
The second quarter economic performance brings the first semester gross domestic product (GDP) growth rate to six percent, which is at the lower end of the government’s full-year assumption of six to seven percent.
“This performance keeps our position as one of Asia’s best-performing major emerging economies. For East Asia’s economies that have released their second quarter 2024 GDP growth, we follow behind Vietnam at 6.9 percent while leading Malaysia at 5.8 percent, Indonesia at 5 percent, and China at 4.7 percent,” National Economic and Development Authority (NEDA) secretary Arsenio Balisacan said in a press conference in Quezon City yesterday.
The main contributors to the second quarter growth were construction, 16 percent; wholesale and retail trade; repair of motor vehicles and motorcycles, 5.8 percent; and financial and insurance activities, 8.2 percent.
“The acceleration in GDP growth was driven by a significant increase in total investments by 11.5 percent, fueled by robust construction activities. Public construction sustained double-digit growth (21.8 percent from 12.1 percent) as the government’s infrastructure agencies expedited the rollout of the administration’s construction and rehabilitation projects,” Balisacan said.
He added: “Encouragingly, private construction likewise accelerated (9.9 percent from 5.3 percent), particularly commercial construction (13.6 percent from 6.8 percent). Meanwhile, the notable increase in government final consumption expenditure by 10.7 percent was mainly driven by the timely implementation and expanded coverage programs of various social protection, health and education programs, coupled with the preparatory activities for the 2025 National and Local Elections.”
Among the major economic sectors, industry and services posted year-on-year growths in the second quarter of 2024 with 7.7 percent and 6.8 percent, respectively.
However, the agriculture, forestry and fishing sector posted a year-on-year decline of 2.3 percent.
“While these numbers are encouraging, our growth performance could have been even more impactful on all Filipinos if not for the high inflation and interest rates that the country experienced in the last two years,” Balisacan said.
Considering the lagged effect of interest rate hikes that the Bangko Sentral ng Pilipinas carried out in response to the high inflation in 2022 and early 2023, Balisacan estimates economic growth could have been over half a percentage point higher in 2023 if such rate hikes did not materialize.
“More importantly, with slower increases in food prices, our efforts could have reduced the poverty incidence to around 13 to 14 percent in 2023, instead of the actual reported figure of 15.5 percent, if inflation had been within target during the year,” Balisacan said.
“This would have translated to an even higher reduction in the number of poor people by 4.4 million instead of the actual reported 2.5 million between 2021 and 2023,” he added.
Balisacan said keeping food inflation and interest rates manageable is expected to spur both consumption and investment activity among households and businesses, strengthening economic growth prospects in the coming months and the medium term.
“Amid evolving risks and challenges, the Philippines’ economic outlook remains promising in the near and medium term,” Balisacan said.
In a separate statement, Finance Secretary Ralph Recto said the economy’s recent growth performance demonstrates that infrastructure is the way forward.
“We need to build more, build better and build faster so that Filipinos can reap the benefits of these high-impact projects at the soonest possible time. They will not only produce more jobs but improve the overall quality of life of our people,” Recto said.
Budget Secretary Amenah Pangandaman, in a statement, renewed her call to all government agencies to ensure the judicious allocation and spending of resources so that the full potential towards lasting economic prosperity can be unlocked.
“Rest assured, we are focused on pursuing job-creating growth and poverty-reducing growth, and we are inspired to work even harder toward our inclusive economic transformation and sustainable growth,” Pangandaman said.
