The Philippine economy grew by only 4.3% in the second quarter of 2023, which is slower than expected. Experts had predicted a growth rate of 6%, but the actual growth rate was 1.7% lower.
The government’s economic team is still optimistic that they can reach their target of 6-7% growth for the whole year, but they will need to see a significant improvement in the second half of the year.
The main contributors to growth in the second quarter were the wholesale and retail trade, financial and insurance activities, and transportation and storage sectors.
However, growth was tempered by high commodity prices, the lagged effects of interest rate hikes, contraction in government spending, and slower global economic growth.
The Bangko Sentral ng Pilipinas (BSP) has raised its benchmark interest rate by a total of 4.25 percentage points to combat inflation.
This has made it more expensive for businesses to borrow money, which has slowed down investment and economic activity.
Government spending also contracted in the first half of the year, as there was no election-related spending.
The government plans to accelerate spending in the second half of the year to boost growth.
The country’s largest business organization, the Philippine Chamber of Commerce and Industry (PCCI), is not optimistic about the Philippines’ economic growth for the remainder of 2023.
They cite the rising cost of fuel, the country’s worsening maritime and diplomatic issues with China, and the slow pace of government spending as some of the challenges facing the economy.
Overall, the Philippine economy is facing some headwinds in the second half of 2023.
The government and businesses will need to work together to overcome these challenges and achieve the full-year growth target.
Source: PhilNews24 | August 11, 2023
