The Philippine economy grew well short of expectations in the second quarter as high inflation weighed on household spending and weak global demand and higher imports dampened net trade.
Gross domestic product grew 7.4 percent on a yearly basis in the second quarter, the Philippine Statistics Authority said Tuesday.
This was slower than the revised 8.2 percent increase in the first quarter and economists’ forecast of 8.6 percent and also marked the weakest expansion in three quarters.
On the expenditure-side, household spending grew at a slower pace of 8.6 percent after rising 10.0 percent quarter ago. On the other hand, growth in government expenditure accelerated to 11.1 from 3.6 percent.
At the same time, gross capital formation advanced 20.5 percent after a 20.4 percent rise.
Exports of goods and services climbed 4.3 percent, while imports grew markedly by 13.6 percent.
Quarter-on-quarter, GDP fell 0.1 percent, confounding expectations for an expansion of 0.5 percent.
The economy is facing the triple threat of accelerating inflation, rising borrowing costs and a relatively high debt-to-GDP ratio, ING economist Nicholas Mapa said. GDP growth is set to settle at the lower-end of the government’s 6.5-7.5 percent target.
Despite the disappointing growth report, Bangko Sentral ng Pilipinas is likely to maintain its hawkish bias for the rest of the year, the economist added.
Capital Economics’ economist Gareth Leather said growth is set to remain subdued in the second half of 2022 as high commodity prices, rising interest rates and weaker global demand drag on the economy.
In a separate communiqué, the statistical office said the trade deficit widened to $5.84 billion in June from $3.33 billion a year ago. In May, the trade shortfall was $5.55 billion.
In June, growth in exports eased to 1.0 percent from 6.4 percent in May. At the same time, imports advanced 26.0 percent after a 30.2 percent rise in May.
Another report from the statistical office today showed that the value of total manufacturing increased 9.8 percent annually, following May’s 8.0 percent increase in May. The volume growth improved to 2.4 percent from 0.9 percent.
In June, producer price inflation increased to 7.2 percent from 7.0 percent in May. In June 2021, producer prices had declined 1.4 percent.
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