The Philippine economy experienced a stronger-than-expected expansion in the second quarter of 2024, driven by increased government spending and investments, which helped counterbalance sluggish consumer spending due to rising inflation. According to the Philippine Statistics Authority, the country’s Gross Domestic Product (GDP) grew by 6.3% from April to June compared to the same period last year.
This second-quarter growth represents the fastest annual expansion since the 6.4% growth recorded in the first quarter of 2023. It also surpasses the upwardly revised 5.8% growth seen in the first quarter of 2024, signaling a continued positive trajectory for the Philippine economy despite challenges.
Consumer spending, which accounts for about two-thirds of the country’s economic output, grew by 4.6% during this period. However, this growth was relatively modest, reflecting the impact of high inflation on household budgets. Economic Planning Secretary Arsenio Balisacan described consumer spending as “anaemic,” noting that its growth was not as robust as expected. Indeed, on a quarter-on-quarter basis, consumer spending actually dipped by 0.1%, largely due to lower sales in sectors like restaurants and hotels.
On a more positive note, investments surged by 11.5%, and government spending grew by 10.5% in the same quarter, providing critical support to the overall economic expansion. The first-half GDP growth now averages 6.0%, keeping the country on track to meet its full-year growth target of 6.0% to 7.0%, according to Balisacan.
Economists suggest that further monetary easing could help sustain this growth momentum. HSBC, in a research note, indicated that reducing borrowing costs could spur both consumption and private investment, although these effects might materialize with some delay. The bank anticipates a 25-basis point cut in the policy rate to 6.25% during the central bank’s upcoming meeting on August 15, with another 25-basis point cut expected later in the year.
On a seasonally adjusted basis, the Philippine economy grew by 0.5% quarter-on-quarter, a slowdown from the previous quarter’s 1.3% growth and below the 0.9% forecast by economists. This deceleration coincides with the latest inflation data, which showed a 4.4% rise in consumer prices in July, marking the fastest pace of inflation in nine months. This inflation rate, exceeding market expectations, has cast doubt on the likelihood of a rate cut in the near term, as indicated by the central bank governor.
Despite these inflationary pressures, the Philippine economy received a boost from a decline in the unemployment rate, which fell to 3.1% in June—the lowest since December 2023. This improvement in the labor market suggests a strengthening economic foundation, though challenges remain.
Notably, the agriculture, forestry, and fishing sectors continued to struggle, contracting by 2.3% year-on-year in the second quarter. This decline is largely attributed to the prolonged dry spell caused by the El Niño weather pattern, which has severely impacted agricultural productivity.
Overall, while the Philippine economy shows resilience and growth, it faces significant challenges, particularly from inflation and sector-specific weaknesses. Continued strategic economic management, including potential monetary easing and targeted support for struggling sectors, will be crucial to sustaining this growth in the coming months.
| GDP (nominal) | Capital | Head of State | Head of Government | GDP (nominal) per capita | GDP (PPP) | GDP (PPP) | GDP (PPP) per capita |
|---|---|---|---|---|---|---|---|
| Philippines | Manila | Bongbong Marcos | Bongbong Marcos | 435.675 | 3.859 | 1.278.624 | 11.326 |
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