The economy posted a slower growth of 7.4 percent in the second quarter of the year, the Philippine Statistics Authority (PSA) reported yesterday.
The figure was slightly below expectations for the period.
The first semester growth of 7.8 percent, however, is well above the Development Budget Coordination Committee’s (DBCC) full year growth target of 6.5 to 7.5 percent.
PSA data showed that growth in the second quarter was slower than the 12.1 percent expansion in the same period in 2021, with the spike last year partly due to base effects, coming from a sharp decline of 16.9 percent in the second quarter of 2020.
The second quarter 2022 figure is also slower than the 8.2 percent year-on-year expansion in the first quarter of this year.
“This growth is slightly less than the median forecast of 7.5 percent,” said Arsenio Balisacan, National Economic and Development Authority (NEDA) secretary, in a briefing yesterday.
“Still, this figure places the country as the second best-performing nation among the region’s major emerging economies that have released their second quarter reports,” Balisacan added.
He said the Philippines is next to Vietnam’s 7.7 percent but faster than Indonesia’s 5.4 percent and China’s 0.4 percent.
He added this performance also remains in line with the expected growth in 2022.
“Timely changes in COVID-related policies, such as easing alert levels, removing tourism restrictions and accelerated vaccine rollout, helped increase economic activities,” Balisacan said.
He added as of June 2022, around 85 percent of the economy is already under alert level 1.
“That these changes were implemented during the recently-held national and local elections demonstrates that, indeed, ‘living with the virus’ is possible,” Balisacan said.
Growth would “definitely be better” in the second quarter if not for the faster inflation, he noted.
“The consumption side, that’s 70 percent of the economy, so if the purchasing power of consumers is improved by the reduction in prices, obviously that will boost (growth). It will obviously be a positive thing,” Balisacan said.
“The global headwinds, particularly inflation, imported inflation, particularly those coming from fuel and food, contributed to the noticeable slowdown (quarter-on-quarter), to the extent that this is expected to continue in the second half… likely to face some challenges in sustaining that growth. But as we have mentioned earlier, we have already taken account such development in our revisited projection for the year, so we might not grow as fast in the second half as in the first half, but the overall growth is likely to be within the 6.5 to 7.5 percent,” he added.
All sectors on the production side expanded in the last quarter, driven by the services and industry sectors at 9.1 percent and 6.3 percent, respectively.
“Transport, accommodation, food service, and other services have shown continued yet slow signs of recovery to their pre-pandemic levels,” Balisacan said.
Agriculture remained weak at 0.2 percent growth as it remains vulnerable to natural calamities and rising input costs.
“Given the agriculture sector’s weak performance, the government will provide support through lower input costs, access to new farming technologies, financial assistance to farmers and strengthening the agricultural value chain,” Balisacan said.
The manufacturing sector’s growth decelerated to 2.1 percent in the second quarter, down from 22.4 percent in the same quarter last year.
“The slowdown was due to the weaker growth in computers, electronic and optical products, chemical and chemical products and food products. The slowdown may be due to inflationary pressures brought about by the Russia-Ukraine war, weakening global demand and supply chain disruptions brought by lockdowns in China,” Balisacan said.
“We are also pleased to note the recovery of the services sectors that have been hit hard by the COVID-19-induced restrictions. The trade sector grew by 9.7 percent in the second quarter from 5.4 percent in the same period last year. The increase in foot traffic in retail and recreation centers, given improvements in mobility and easing of border restrictions, supported the faster growth in wholesale and retail trade,” he also said.
“The full reopening of the economy will indeed generate more income-earning opportunities. But the purchasing power of that income may be eroded by the high inflation, primarily resulting from increased fuel and food costs. Consequently, the government is focused on ensuring food security and reducing transport, logistics, and energy costs,” Balisacan said.
For his part, Finance Secretary Benjamin Diokno reassured the public the economy is on a steady path to recovery and expansion, as demonstrated by the broad-based 7.4 percent gross domestic product (GDP) growth.
“All three major sectors — agriculture, industry, and services — posted positive growth rates despite the increase in international commodity prices, indicating a rebound in overall economic activity,” Diokno said.
“Private domestic demand likewise expanded with household consumption (8.6 percent growth rate) and gross capital formation (20.5 percent growth rate) providing robust support to the economy,” he added.
He said the strong growth in the second quarter reflects the increase in mobility, better labor conditions and government’s support to growth.
“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,” Diokno said.
He said the DBCC growth targets for the year remain doable given bright economic prospects.
“To achieve the lower bound of the growth forecast of 6.5 percent, the economy has to grow by only 5.2 percent in the second half of the year. To achieve the upper bound of 7.5 percent, the economy has to grow by 7.6 percent,” he said.
