- Q2 GDP grows 7.4% y/y, below +8.6% forecast
- Growth slowest in three quarters
- Govt says Q2 growth in line with 2022 target
MANILA — The Philippine economy expanded less than expected in the second quarter, but at pace still in line with the official 2022 growth target, giving the central bank leeway to further tighten monetary policy to curb red-hot inflation.
The Southeast Asian country’s gross domestic product PHGDP=ECIwas 7.4% higher in the June quarter than a year earlier, growing more slowly than the downwardly revised 8.2% annual rate seen in the previous quarter and the median 8.6% forecast in a Reuters poll.
It was the slowest growth in three quarters but the second-fastest so far in Asia for the second quarter, Economic Planning Secretary Arsenio Balisacan said.
The Bangko Sentral ng Pilipinas (BSP) has flagged the possibility of raising key interest rates further by 50 basis points at its Aug. 18 policy meeting, confident the economy can withstand a less accommodative policy.
It has raised interest rates PHCBIR=ECI by a total 125 basis points since the start of the year to tame inflation, which soared to its fastest pace in nearly four years in July.
Balisacan attributed the second-quarter growth rate to strong construction and household consumption, among other factors.
He said the country’s economic recovery remained strong, with the second-quarter performance in line with this year’s growth target for full-year GDP of 6.5% to 7.5%.
The administration of President Ferdinand Marcos, whose six-year term began on June 30, is further targeting growth in full-year GDP of 6.5%-8.0% annually from 2023 to 2028.
Marcos, who is concurrent agriculture secretary, has vowed to turn the long-neglected farm sector into an engine of growth and to focus on fiscal management and infrastructure upgrades to sustain the economy’s rebound from the pandemic.
—Reporting by Neil Jerome Morales, Karen Lema and Enrico Dela Cruz; Editing by Martin Petty and Bradley Perrett