Better-than-expected GDP growth seen in Q2

The reopening of the economy with the lifting of restrictions on the movement of people and goods may have enabled the Philippine economy to grow faster by as much as 10.3 percent in the second quarter this year from the same period last year.

United Kingdom-based research firm Capital Economics said in a commentary it had raised its forecast for the second quarter from the earlier projection of a gross domestic product (GDP) growth rate of 8.3 percent, the same as what the Philippine Statistics Authority recorded for the first quarter of 2022.

Capital Economics sees “steady growth” for Philippine GDP, meaning that—on a quarter on quarter basis, comparing consecutive three-month periods—growth had been “broadly unchanged” in April-June compared to January-March.

“A reopening boost will have provided an important support to the economy last quarter after a drop in virus cases led to a sharp rebound in mobility,” the group said.

“However, the recovery is being held back by drags from elsewhere,” it added, referring to higher commodity prices and interest rates.

Inflation ran faster month after month to end the second quarter at 6.1 percent. Meanwhile, the Bangko Sentral ng Pilipinas raised its policy rate by a total of 0.5 percentage point to 2.5 percent during the quarter.

Capital Economics noted that, while these developed, the growth rate of exports from the Philippines was flat.

The Netherlands-based ING Bank also revised its second-quarter forecast to 8.8 percent from 8.3 percent as the Philippine economy might have sustained its first-quarter momentum.

“Election-related spending will likely boost growth … with household consumption getting an extra lift after mobility curbs were relaxed in March,” ING Bank said.

GoldmanSachs Macro Economics Research also revised upward its forecast to 8.5 percent from 8.3 percent previously, citing brisk activities in the services sector thanks to eased restrictions on mobility.

The New York-based research firm said, however, that economic reopening in the Philippines happened earlier than it expected. Thus, it said growth in the third quarter would grow slower than previously forecast.

HSBC Global Research, meanwhile, believes Philippine GDP grew “almost at the same pace as in the first quarter” at 7.7 percent in the second quarter, revised from their previous forecast of 8.1 percent.

“While the reopening of the economy boosted growth somewhat, higher price pressures may have squeezed real incomes, weighing on overall growth,” HSBC said.

Robert Dan Roces, assistant vice president and economist at Security Bank Corp., said their estimate was at 7.5 percent amid the slower growth in private consumption amid high inflation.

Still, this “may have been offset by better government expenditure, good capital formation and strong imports,” Roces said.

The government’s economic team assumes that the domestic economy will grow by 6.5 percent to 8 percent yearly from 2023 to 2028 at the end of President Marcos’ term.

—Ronnel W. Domingo INQ