The Philippine economy experienced moderate growth in the second quarter of 2023, with a total output increase of only 4.3 percent. This growth rate is significantly slower than previous comparative periods and falls short of the common forecast of 6 percent by private sector economists. In comparison to the same period in 2022, where a growth rate of 7.5 percent was recorded, and the first quarter of this year with 6.4 percent growth, the second-quarter results are disappointing.
Despite this, the Marcos administration’s economic team remains optimistic that the full-year growth target of 6 to 7 percent can still be achieved. Secretary Arsenio Balisacan of the National Economic and Development Authority (Neda) stated in a press briefing that the country’s GDP needs to grow by at least 6.6 percent in the second half of 2023 to meet the target.
National Statistician Dennis Mapa reported that all three major economic sectors experienced growth in the second quarter—industry at 2.1 percent, services at 6 percent, and agriculture, forestry, and fishing at 0.2 percent. The main contributors to this growth were wholesale and retail trade, which grew by 5.3 percent, financial and insurance activities at 5 percent, and transportation and storage at 17.3 percent.
Balisacan attributed the second-quarter results to various factors, such as the recovery of employment and jobs to historic highs, the return of tourism growth areas, increased investment registration activities, and the reopening of schools. However, these growth drivers were tempered by high commodity prices, the effects of interest rate hikes, a contraction in government spending, and slower global economic growth.
“We are already experiencing the impact of the aggressive monetary policy tightening by the Bangko Sentral ng Pilipinas (BSP), and this may continue until the end of the year,” said Balisacan.
The BSP raised its benchmark interest rate to 6.25 percent from a historic low of 2 percent as the country emerged from restrictive pandemic measures. This resulted in a higher cost of loans for big-ticket expenses, decreasing the enthusiasm of households and businesses to make such purchases.
Despite a contraction of 7.1 percent in government expenditure in the first half of the year due to the absence of election-related spending, Balisacan assured that it will accelerate in the coming quarters to regain growth momentum. He emphasized the need to execute government programs and projects, including the delivery of public services, under the 2023 national budget.
However, Budget Secretary Amenah Pangandaman has ordered national agencies to present a “catch-up plan” as they have been spending their budget allocations too slowly.
The Philippine Chamber of Commerce and Industry (PCCI) expressed concern about the country’s economic growth in the second half of 2023, citing various challenges. George Barcelon, president of PCCI, mentioned rising fuel costs and the ongoing maritime and diplomatic issues with China as factors contributing to this negativity.
“All of these sentiments are creating a negative perception that things are not going smoothly here. Therefore, I am not optimistic about the second half of the year,” Barcelon said.
This article was originally published on the Inquirer website.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
