The economy recorded its weakest performance in about two years as growth slowed down to 4.3 percent in the second quarter of 2023, according to the Philippine Statistics Authority (PSA).
The PSA data showed the second quarter growth rate is the weakest recorded since the 3.8 percent contraction in the first quarter of 2021.
The latest figure eased from the 6.4 percent expansion in the first quarter of 2023, as well as the 7.5 percent jump in the same period a year ago.
“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,” National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said in a press conference in Quezon City yesterday.
The weaker second quarter performance brings the economy’s first semester average growth rate to 5.3 percent.
“To achieve the target growth rate of six to seven percent for the year, the country’s gross domestic product needs to grow by at least 6.6 percent in the second half of 2023. Notwithstanding the challenges, we believe this is still attainable,” Balisacan said.
He said government expenditure in the second quarter contracted by 7.1 percent in the absence of election-related spending in the first half of the year.
Earlier, Finance Secretary Benjamin Diokno expressed dissatisfaction over the spending performance in the first semester, with the smaller deficit due to expenditures falling below program.
The government underspent by 6.6 percent during the period with expenditures amounting to P2.41 trillion versus the P2.58 trillion goal.
Balisacan, however, expressed optimism government spending will accelerate in the coming quarters to allow the economy to recover its growth momentum.
“We will accelerate the execution of government programs and projects, including the delivery of public services, under the 2023
national budget. Government agencies, including local and regional government entities, are encouraged, if not instructed, to formulate catch-up plans, accelerate, and even frontload the implementation of said programs and projects,” Balisacan said.
He said inflation has been decelerating in recent months, reaching 4.7 percent in July.
“We will continue to intensify our supply-side interventions and demand-side management measures to maintain overall price stability amid upside risks such as weather disturbances, including El Niño, trade tensions, and the imposition of export bans in other countries. The improving outlook for inflation bodes well for the easing of interest rates and should pave the way for the expansion of activities of businesses, households, and the rest of the private sector,” Balisacan said.
To address the adverse impact of the recent typhoons and monsoon rains, Balisacan said the immediate use of the Quick Response Fund and other disaster-related budgetary instruments of the government has been recommended.
Asked about possible risks ahead, Balisacan cited uncertainties in the external environment, while locally would be the impact of calamities such as typhoons which come often in the second half of the year.
“We are still confident we can address the issues of this slowdown and we therefore stick to the targets for now. We periodically review the targets and ensure that these are still realistic. Given the developments, they are still achievable,” Balisacan said.
“The economic team is closely monitoring domestic and external developments and is ready to make policy adjustments to ensure that we attain our medium-term growth targets. We firmly believe that the prospects of the Philippine economy remain strong and positive,” he added.
