The Philippines was Asia’s fastest growing economy in the second quarter, based on the government’s announcement on Thursday of 7.0 percent annual expansion in April-June. However, the first quarter growth was revised downwardly to 6.8 percent year-on-year from the initial reading of 6.9 percent.
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Pernia, also director general of the National Economic and Development Authority (Neda), said the economy need to grow by at least 5.1 percent in the second half of the year to at least attain the low-end growth target for 2016.
His administration sees a steady acceleration in growth to 7% to 8% in the medium term, Socioeconomic Planning Secretary Ernesto Pernia said at a briefing after the GDP release.
Economists polled by Reuters had forecast the economy would expand an annual 6.7 per cent in the latest quarter.
“The previous administration gave us a strong and stable economy that we can build on further by maintaining the sound macroeconomic, fiscal, and monetary policies already in place”, Pernia said. “However, the challenge is to make this growth inclusive so that more people contribute to, and benefit from it”.
“Overall, domestic demand growth accelerated to 12.3 percent from 12.0 percent in the first quarter of 2016”, he said.
Driven by the implementation of social programs, government spending logged a double-digit growth of 13.5 percent. Investment in fixed capital formation surged 27.2 percent.
The pace is the fastest for a quarter in three years. On the other hand, agriculture output declined 2.1 percent.
Exports of goods increased only 4.1 percent and that of services gained 15.3 percent.
Conversely, he said imports of goods rose to 22.9 percent largely due to increased purchases of captal goods and durable, which indicate an increase of investments from firms. “This is a normal occurrence during election years”.
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“This will be supported by sustained and deepened reforms”, he said, citing the comprehensive tax reform, sustained investment in infrastructure, easing of restrictions on foreign investments, reduction of cost of doing business, and strengthening of agro-industrial linkages.
