Economy grew by 5.5 percent in Q2 - PSA

Metro Manila, Philippines - The Philippine economy expanded by 5.5 percent in the second quarter, the Philippine Statistics Authority (PSA) reported Thursday, Aug. 7, driven by a strong rebound in agriculture output and solid household consumption.

The figure was slightly faster than the 5.4 percent growth in the first quarter, but weaker than the 6.5 percent year-on-year.

PSA data showed the agriculture sector led the uptick in the April-June period with a 7 percent growth, reversing a 2.3 percent contraction in the same period last year. It was also a much higher output from the 2.2 percent growth during the first three months.

READ: Agri output grows by 5.7% in Q2 

Household spending recorded a year-on-year expansion of 5.5 percent, and was also higher than the 5.29 percent in the previous quarter. The government attributed the growth to stable prices and managed inflation.

RELATED: Inflation eases to 0.9 percent in July 

Meanwhile, the slowdown in government spending could be attributed to lower public construction during the election ban. But election spending also helped in household consumption, particularly in food, and jobs related to political organizations.

Socioeconomic Planning Secretary Arsenio Balisacan said the Q2 expansion showed the economy’s “resilience and stability” amid global challenges.

Year-to-date average growth was at 5.4 percent, a tad lower than the low-end of the government target range of 5.5 percent to 6.5 percent for the year.

While Balisacan said the lower end was “just around the corner,” National Statistician Dennis Mapa said the economy would need to grow by 7.5 percent in the second semester to reach the upper end.

“7.5 [percent] is high but it’s not impossible,” Balisacan said. “If you see continuing, for example, improvement in the confidence of our consumers and our domestic investors in the economy, we should see greater growth, higher growth in both consumption and investment, and the services.”

Balisacan also said the government is expecting low inflation to sustain the momentum in domestic consumption in the next months. He also said no major weather-related events are expected to hamper continuous improvement in the agriculture and manufacturing sectors.

On global economy

Balisacan also said the global economy would stabilize amid uncertainty surrounding the tariffs imposed by US President Donald Trump.

“We hope there will be no further destabilization in the expectations about the global economy, the trade uncertainty, which affected not only the Philippine exports and trade but the trade of many other countries as well,” he said.

But Trump announced the United States will impose a tariff of about 100 percent on imports of semiconductors but will not be applied to companies that are manufacturing in the US.

Balisacan said the policy may be expected not to have adverse effects on the country’s economy, even if semiconductors are the top Philippine exports to the US.

Semiconductors from the Philippines are also spared from the 19 percent tariff if they enter the US.

“For one, the value added of semiconductors and electronics is actually not that high compared to value added for other exports like other manufacturing… Semiconductors and electronics are very highly dependent on imports,” Balisacan said.