The Philippines second quarter gross domestic product growth disappoints as services, manufacturing, and agriculture struggle

MANILA, Philippines – The Philippines gross domestic product (GDP) grew at a slower pace of 7.4% in the second quarter of 2022, missing expectations amid high inflation, the Philippine Statistics Authority reported on Tuesday, August 9.

GDP growth posted during the Duterte administrations last quarter in office is lower than analysts estimates, based on polls by BusinessWorld and Bloomberg, but in line with the Marcos administrations full-year target of 6.5% to 7.5%.

Philippines GDP Growth

Finance Secretary Benjamin Diokno earlier told reporters that double-digit growth would be posted.

The latest figure is lower than the downward revised figure of 8.2% for the first quarter of 2022 and the 12.1% recorded in the second quarter of 2021.

Services had the largest share in the overall GDP growth figure, accounting for 5.5 points of the 7.4% growth. Industrys share was 1.9, while agriculture was just at 0.02.

A higher GDP figure is desirable, especially now that the country needs to outgrow its debt.

Headwinds

National Statistician Dennis Mapa noted that quarter-on-quarter GDP growth contracted slightly by 0.1%, as the services sector faced headwinds fueled by inflation.

Inflation hit 6.4% in July, with economists fearing that it has yet to peak.

Meanwhile, Socioeconomic Planning Secretary Arsenio Balisacan said transport, accommodation, food service, and other services have shown continued yet slow signs of recovery to their pre-pandemic levels. Agriculture also remained weak and vulnerable to calamities and rising input costs.

Given the agriculture sectors weak performance, the government will provide support through lower input costs, access to new farming technologies, financial assistance to farmers, and strengthening the agricultural value chain, Balisacan said.

Manufacturing growth also decelerated to 2.1% in the second quarter from 22.4% in the same quarter in 2021.

The slowdown was due to the weaker growth in computers, electronic and optical products, chemical and chemical products, and food products. The slowdown may be due to inflationary pressures brought about by the Russia-Ukraine war, weakening global demand, and supply chain disruptions brought by lockdowns in China, Balisacan said.

On the upside, the 7.4% growth places the Philippines as the second best performing nation among the regions major emerging economies that have released their second quarter reports.

Our country is next to Vietnams 7.7% but faster than Indonesias 5.4% and Chinas 0.4%. This performance also remains in line with our expectations, or our expected 6.5% to 7.5% growth in 2022, Balisacan said.