Philippine Q2 GDP Growth Expected to Accelerate Due to Higher Household Spending

The Philippine economy is expected to have grown faster in the second quarter of 2024, driven by increased household spending and a decline in inflation within the government’s target range, according to economic managers.

Economic managers predict that the second-quarter GDP growth will reach 6.0%, an improvement from 5.7% in the previous quarter and significantly higher than the 4.3% growth recorded in the second quarter of 2023.

“It’s probably close to at least the lower end of the target,” said National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan during the Post-SONA Discussions in Pasay City. The government has set a GDP growth target of 6% to 7% for 2024.

Finance Secretary Ralph Recto highlighted that consumption remains the primary growth driver. “Still, number one will be consumption because that’s the biggest part. I mean, household consumption is number one, and that’s supported by what we see on bank lending and credit cards, in spite of high interest rates,” Recto stated.

Economic Indicators and Data

Recent data from the Bangko Sentral ng Pilipinas (BSP) indicated that bank lending reached a 14-month high of PHP 12 trillion in May, reflecting a 10.1% year-on-year growth—the fastest since March 2023. Additionally, the BSP’s Monetary Board maintained policy rates at 17-year highs while revising its 2024 inflation outlook downward to 3.8% from 4.0%.

Balisacan pointed to various indicators suggesting stronger GDP growth figures in the second quarter. “The employment numbers are okay. Exports for the first half are turning out well,” he said.

The latest Labor Force Survey data from May showed an employment rate of 95.9%, equating to 48.87 million individuals employed or engaged in livelihood activities during the period. Moreover, exports from January to May reached $30.84 billion, a 7.8% increase from $28.61 billion in the same period last year, as reported by the Philippine Statistics Authority.

“These are pretty good indicators,” Balisacan noted. “I’ll wait for a few more numbers, especially the official data.”