Philippines GDP grew 6.3% in second quarter of 2024

The Philippines’ gross domestic product (GDP) expanded 6.3% in the second quarter of 2024, led by increased government spending and robust investment that offset the impact of high consumer prices on household spending.

The latest GDP growth accelerated from the 5.8% annual growth in the first quarter and marked the fastest expansion in four quarters. This brought average first-half GDP growth to 6%, within the government’s 6% to 7% target for the year. It also exceeded the 6% average forecast in a recent Inquirer poll of 11 economists.

“This performance maintains our position as one of Asia’s top-performing major emerging economies,” National Economic and Development Authority Secretary Arsenio Balisacan said Thursday.

The country’s growth rate surpassed Indonesia’s 5.05%, China’s 4.7%, and Malaysia’s 5.8%. It trailed only Vietnam’s 6.9%.

Government spending surged 10.7% from 1.7% in the previous quarter, rebounding from a 7.1% decline last year. Balisacan attributed the increase to expanded social protection, health, and education programs, as well as preparations for next year’s elections.

The Philippine Statistics Authority (PSA) reported industry and services grew 7.7% and 6.8% year-over-year in the second quarter. Agriculture, forestry, and fishing contracted 2.3% amid the El Niño dry spell.

Construction led overall growth, up 16%. Wholesale and retail trade, as well as repair of motor vehicles and motorcycles, grew 5.8%, while financial and insurance activities expanded 8.2%.

Seasonally adjusted GDP grew 0.5% from the previous quarter, slower than the 1.1% expansion earlier.

Consumers Under Pressure

Household spending grew 4.6%, slower than the 5.5% growth in the same period a year ago — the weakest post-pandemic performance. Balisacan said high inflation and interest rates had hurt consumers and would likely persist.

“Keeping food inflation and interest rates manageable is expected to boost consumption and investment, strengthening our economic growth prospects,” Balisacan said.

Inflation in July accelerated to 4.4%, exceeding the government’s 2% to 4% target for the first time this year. The Bangko Sentral ng Pilipinas’ key policy interest rate remains at a 17-year high of 6.5%.

“Domestic demand is under pressure after a year of resilience amid tight monetary policy and high inflation,” said Shivaan Tandon, economist at Capital Economics.

Gross capital formation, the investment component, accelerated 11.5% from 0.5%. Balisacan said a rate cut this year could boost spending.

“We need to focus on investments to create high-quality jobs,” he said. “Construction is doing well, both public and private. Other sectors, especially manufacturing, need to speed up.”

Gross national income, which includes GDP and net income from overseas, grew 7.9%, slower than 9.8% in the first quarter and 8.6% a year ago.