PHL economy grows 5.6% in Q2

(Updated 10:17 p.m.) The Philippine economy grew at a slower pace in the second quarter of 2015 from a year earlier, but better than the first quarter performance, as the output in agriculture undermined the expansion in the services industry.

 

The country's gross domestic product (GDP) expanded by 5.6 percent in April to June, figures released by the Philippine Statistics Authority on Thursday show.

 

The 5.6 percent lags behind the 6.7 percent reported in the same period last year. But this beats the 5.0 percent in January to March on slower government spending.

 

The year-to-date average of 5.3 percent also lags behind the 6.2 percent reported in the first six months of 2014, posing a threat to the government forecast of 7 percent to 8 percent for the whole of 2015. 

"This is an improvement from the growth in the previous quarter and reflects the significant improvement in government spending, especially public construction,” Economic Planning Secretary Arsenio Balisacan said during a press conference on Thursday.
 
3rd fastest in Asia
 
Despite a weak global economy, the Philippines remained among the fastest growing economies in Asia next to China and Vietnam, according to National Economic Development Authority.
 
"The Philippines’ resilience continues to differentiate the country as a bedrock of stability in the region as we push on with brighter prospects,” Finance Secretary Cesar Purisima said in another statement.
 
The slowdown in China would have a passing impact on the Philippines, as the world’s second largest economy accounts for only 12 percent of external trade, according to the Department of Finance.
 
"Further, the Philippines’ externally-induced growth drivers, such as remittances and BPO receipts, have minimal links with China’s economy,” Purisima said.

Palace cites political stability
 
Malacañang noted the “political stability” experienced by the country under President Benigno Aquino III’s administration contributed to the Philippine economy’s “comparatively reliable performance.”
 
“Along with prudent fiscal management and other factors, this stability has helped the Philippines weather external shocks, proving once again that good governance is good economics,” Aquino’s spokesman, Secretary Edwin Lacierda, said in a separate statement.
 
The government will work to make the poorest Filipinos feel the effects of economic growth, Lacierda said.
 
“At the same time, it is clear that the Aquino administration pursues not just economic growth, but rather inclusive growth, with an emphasis on extending the benefits of national progress to our poorest and most marginalized sectors,” he added.
 
Gov't spending
 
Government consumption rose by 3.9 percent in the second quarter from 1.7 percent in the January to March, while public construction climbed 20 percent to reverse the 24.0 percent decline.
 
"This is a result of government's efforts to address issues on spending bottlenecks, especially for public infrastructure, which held back growth in the first quarter,” Balisacan said.
 
The economy managed to grow in the second quarter from the first quarter mainly on stronger output in the manufacturing sector and in trade and other services.
 
The PSA reported the economy grew by 5.2 percent in the first quarter due to slower government spending. The figure was adjusted to 5.0 percent to reflect the revisions that showed that output in public administration and defense, mining and quarrying, agriculture, hunting, forestry and fishing was actually lower.
 
The government expects public spending to play a bigger role in the second semester, "as we have ample fiscal space in the P2.6-trillion 2015 budget to fund growth-inducing investments,” Purisima said.
 
Growth drivers
 
Domestic demand and private sector investment continue to drive the Philippine economy in the second quarter, according to the PSA.
 
The consumption by Filipino families increased by 6.2 percent and accounted for 4.1 percentage points of the overall economic output.
 
“Domestic demand looks better in the second quarter. This strong domestic demand more than offsets the drag in external trade,” Gonzalo Ordoñez, First Metro Securities Brokerage Corporation president, told GMA News Online.
 
Private sector investment contributed 3.1 percentage points to growth. Capital formation increased by 17.4 percent from 8.3 percent while private consumption maintained a double-digit growth.
 
The services sector expanded by 6.2 percent compared with 5.9 percent a year earlier and 5.4 percent in the first quarter of the year.
 
"This dispels doubts about the sustainability of growth in service-oriented industries, especially in the business process outsourcing (BPO) sector,” Balisacan said.

GDP growth rate expected

Makati Business Club chairman Ramon del Rosario said the GDP growth rate was something most economists expected.

“The second quarter GDP growth of 5.6% is in the range of most economists’ projections. It was realized in spite of weak performance in agriculture and exports and was spurred by welcome investments in public spending," Del Rosario said in a statement.

"It is hoped that continued healthy public spending, especially in the context of the coming 2016 elections and stronger holiday spending and OFW remittances, will give our economy enough of a boost to offset the effects of a severe El Niño and the economic weakness of major countries to still allow us to achieve a full year growth of six percent to 6.5 percent," he added. — With a report by Andreo Calonzo/RSJ/VS/NB, GMA News