Philippine economy likely expanded by 5.5% in second quarter—poll

THE PHILIPPINE ECONOMY likely expanded in the second quarter thanks to cooling inflation, election-related spending, and faster exports, analysts said.

- L.P.Q.Batoon

However, uncertainty over US tariffs may have tempered economic momentum in the April-to-June period, they added.

Gross domestic product (GDP) likely grew 5.5% in the second quarter, according to a median forecast of 17 economists polled by BusinessWorld.

If realized, this would be a tad faster than the 5.4% growth recorded in the first quarter. However, it would be slower than the 6.5% expansion in the second quarter last year.

This would place average growth at 5.5% for the first half, aligning with the lower end of the government’s revised 5.5-6.5% target range.

The Philippine Statistics Authority (PSA) is scheduled to report second-quarter GDP data on Aug. 7.

“Household consumption, the country’s main growth engine, likely strengthened on the back of low and stable inflation, steady remittances, and robust labor market conditions,” Chinabank Research said.

In June, headline inflation ticked up 1.4%, a tad faster than the 1.3% in May but still slower than 3.7% in June 2024, official government data showed. June marked the fourth straight month that inflation was below the central’s bank's 2-4% target for the year.

Inflation averaged 1.8% in the first half, decelerating from 3.6% a year ago.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said household consumption likely remained the main growth driver in the second quarter, supported by election-related spending, easing inflation, and continued strength in consumer lending.

“While disinflation has helped ease cost pressures and support consumption, overall domestic demand remains cautious due to weak consumer and business sentiment, limited fiscal impulse during the election period, and muted employment quality,”

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said.