Philippines’ economy grows 7.4% in Q2 despite headwinds; nat’l debt nears P13 trillion

MANILA – The country’s gross domestic product (GDP) expanded by 7.4 percent in the second quarter of 2022, as the economy recovered strongly with loosened pandemic restrictions boosting economic activities.

This as the country’s outstanding debt nearing to P13 trillion has fallen to 62.1% (P9.6 trillion)  of the gross domestic product (GDP) or the economy as of end-June, latest figures of the Bureau of the Treasury showed.

This is lower than the 63.5% debt-to-GDP (gross domestic product) ratio tallied by the end of the first quarter, the highest since 2005.

Despite the decline, the latest level is still above the international threshold of 60%.

In a press briefing, Socioeconomic Planning Secretary Arsenio Balisacan said while the second-quarter economic growth was slightly lower than the median forecast of 7.5 percent for this year, the Philippines was the second best performing nation among the region’s major emerging economies that have released their reports.

Balisacan said the country was next to Vietnam’s 7.7 percent, but faster than Indonesia’s 5.4 percent and China’s 0.4 percent.

The GDP growth rate for the January to March period has been revised to 8.2 percent. It averaged 7.8 percent in the first half of the year. The economy posted a 5.9-percent pre-pandemic growth in 2019.

“Timely changes in Covid-related policies, such as easing alert levels, removing tourism restrictions, and accelerated vaccine rollout, helped increase economic activities. As of June 2022, around 85 percent of the economy is already under Alert Level 1. That these changes were implemented during the recently-held national and local elections demonstrate that, indeed, ‘living with the virus’ is possible,” Balisacan said.

He said the full reopening of the economy will generate more income-earning opportunities.

“But the purchasing power of that income may be eroded by the high inflation, primarily resulting from increased fuel and food costs. Consequently, the government is focused on ensuring food security and reducing transport, logistics, and energy costs,” he said.

Balisacan, chief of the National Economic and Development Authority (NEDA), remained optimistic that the economy can grow within revised expected 6.5 to 7.5 percent this year despite headwinds, particularly inflation, citing some positive developments like the decline in energy prices in the world market.

“Nearly 70 percent of our economy is really consumption, and services account for 60 percent of the economy so you are likely to have growth and the rest of the economy for the remainder of the year largely coming from the domestic front,” he added.

Balisacan said the economy needs to expand 5.3 percent in the second semester to achieve the 6.5-percent growth, which is “very highly achievable”.

The GDP, on the other hand, needs to accelerate 7.2 percent in July to December to hit the upper-end of this year’s growth target, he said.

National Statistician Dennis Mapa said the country’s GDP stood at P9.6 trillion at constant prices in the first semester of 2022, higher compared to the 2019 first semester of P9.49 trillion.

At current prices, GDP current value reached PHP10.32 trillion in the first semester this year from P9.29 trillion during the same period in 2019, he said.

“So the first semester of 2022 both in the current prices and constant prices are already higher compared to the pre-pandemic level,” he added.

Meanwhile, Balisacan said all sectors on the production side expanded in the second quarter, driven by the services and industry sectors at 9.1 percent and 6.3 percent, respectively.

He cited the recovery of the services sectors that have been hit hard by the coronavirus disease 2019 (Covid-19)-induced restrictions.

“Transport, accommodation, food service, and other services have shown continued yet slow signs of recovery to their pre-pandemic levels,” Balisacan said.

He said the increase in foot traffic in retail and recreation centers, given improvements in mobility and easing of border restrictions, supported the faster growth in wholesale and retail trade.

Balisacan said the agriculture sector was still weak at 0.2 percent growth as the sector remains vulnerable to natural calamities and rising input costs.