The Philippine economy expanded by 6.3 per cent in the second quarter of 2024, according to official data released on Thursday. This growth, the fastest since the 6.4 per cent recorded in the first quarter of 2023, exceeded both the 6.2 per cent forecast in a Reuters poll and the revised 5.8 per cent growth for the first quarter of the year.
The expansion was driven primarily by government spending and investments, which helped counteract the impact of slower consumer spending growth. Consumer expenditure grew by 4.6 per cent during the period, contributing two-thirds of the overall economic output. Investments surged by 11.5 per cent, while government expenditure increased by 10.5 per cent.
Economic Planning Secretary Arsenio Balisacan noted that while the economy is showing strong growth, consumer spending remains “anaemic,” falling short of stronger expectations. He highlighted that despite this, the economy is on track to meet the full-year growth target of 6.0 per cent to 7.0 per cent, with first-half GDP growth averaging 6.0 per cent.
On a seasonally adjusted basis, the economy grew by 0.5 per cent quarter-on-quarter, a slowdown from the 1.3 per cent growth in the previous quarter and below the 0.9 per cent forecast by Reuters.
The GDP data follows a recent inflation report indicating that consumer prices rose at their fastest pace in nine months in July. The inflation rate reached 4.4 per cent, exceeding market expectations and the central bank’s target range of 2.0 per cent to 4.0 per cent. This prompted the central bank governor to suggest that a rate cut at the next meeting on 15 August might be less likely.
Additionally, the Philippine economy benefited from a decrease in the unemployment rate, which fell to 3.1 per cent in June, the lowest level since December 2023.
However, the agricultural sector continued to face challenges, contracting by 2.3 per cent from the previous year due to the prolonged dry spell associated with the El Niño weather pattern.
