PH Posts Faster Growth Rate at 6.3% in Q2

The Philippine economy recorded a faster growth rate in the second quarter of 2024, achieving its highest growth in five quarters. This growth is attributed to robust consumption activities during the period, according to the Philippine Statistics Authority (PSA).

At a press conference, PSA chief and National Statistician Claire Dennis Mapa reported that the country’s gross domestic product (GDP) grew by 6.3% from April to June 2024. This marks an increase from the revised GDP growth rate of 5.8% in the first quarter of the year and is the fastest growth rate since the 6.4% seen in Q1 2023.

Significant Development in East Asia

Among East Asian economies that have released second-quarter figures, the Philippines’ growth rate is behind Vietnam’s 6.9% but ahead of Malaysia’s 5.8%, Indonesia’s 5.0%, and China’s 4.7%.

“This significant development brings our real GDP growth to 6.0% for the first half of the year, keeping us on track to achieve our target growth of 6 to 7% for 2024,” stated National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan.

Contributors to Growth

The PSA identified key contributors to the latest economic growth:

• Construction: 16.0%
• Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles: 5.8%
• Financial and Insurance Activities: 8.2%

Major economic sectors showed varied performance:

• Industry: Expanded by 7.7%
• Services: Grew by 6.8%
• Agriculture, Forestry, and Fishing: Declined by 2.3%

On the demand side, household spending was the major growth driver, increasing by 4.6%. Other significant increases included government spending (10.7%), gross capital formation (11.5%), exports of goods and services (4.2%), and imports of goods and services (5.2%).

The gross national income rose by 7.9%, while net primary income from the rest of the world increased by 24.7%.

Inflation and Interest Rates Impact

“While these numbers are encouraging, our growth performance could have been even more impactful on all Filipinos if not for the high inflation and interest rates that the country experienced in the last two years,” Balisacan noted. He estimated that economic growth could have been over half a percentage point higher in 2023 if not for the interest rate hikes by the Bangko Sentral ng Pilipinas in response to high inflation.

Since May 2022, the central bank has raised key policy rates by 450 basis points to control inflation, which averaged 6.0% in 2023, above the target range of 2.0% to 4.0%.

Future Economic Outlook

“Amid evolving risks and challenges, the Philippines’ economic outlook remains promising in the near and medium term,” Balisacan said. The government targets a 6.0% to 7.0% growth for 2024, 6.5% to 7.5% for 2025, and 6.5% to 8.0% for 2026 to 2028.