Philippines posts 6.3% economic growth in Q2

The Philippine economy recorded a robust growth rate of 6.3% in the second quarter of 2024 as the government lifted spending, but headwinds such as inflation remain.

The above-mentioned growth beat the 6.2% growth forecast in a Reuters poll of economists and was quicker than the 5.8% expansion in the first quarter of the year.

Among the components that make up the overall gross domestic product (GDP) figures, government expenditure grew 10.7% year-on-year thanks to ambitious infrastructure projects, defence equipment upgrades and preparations for the upcoming 2025 midterm polls.

Household spending, which accounts for 70% to 80% of GDP, rose 4.6% year-on-year in the reviewed period.

Despite the fastest quarterly growth rate in the last five quarters, Secretary of Socioeconomic Planning Arsenio Balisacan told reporters on Wednesday that household spending in the period was weak with growth not as strong as expected, as consumers felt the lagging effects of higher interest rate hikes and high inflation.

The key policy rate of the Bangko Sentral ng Pilipinas currently stands at 6.5%. The consumer inflation rate rose to 4.4% in July, above the central bank's target range of 2-4%.

Ahead of the release of the quarterly figures, the Philippine Statistics Authority on August 7 revised the January-March growth rate to 5.8%, up from the previously announced 5.7%, based on upward revisions in financial activities and wholesale and retail sales, among other factors.

The country's GDP growth averaged 6% in the past two quarters. If this trend continues, the Philippine economy could reach its growth target of 6-7% this year, making it one of the fastest-growing economies in Southeast Asia.