MANILA, Philippines — The economy can still attain the lower end of the government’s growth target of six percent this year, despite the slower gross domestic product (GDP) expansion in the second quarter, with employment and infrastructure spending seen to boost growth in the second half.

“We think the economy has sufficient vitality to still meet the lower part of the government’s target of six to seven percent,” said First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Capital Markets Research in a market report released yesterday.

This, even as the economy posted a tepid expansion of 4.3 percent in the second quarter, slower than the 6.4 percent growth in the previous quarter and 7.5 percent growth in the second quarter last year.

With GDP growth in the first semester settling at 5.3 percent, FMIC and UA&P said there remains more work to be done in the second half to achieve the government’s GDP growth target.

FMIC and UA&P said the economy can still grow by six percent for this year, citing the robust employment levels in high multipler sectors like manufacturing, construction, as well as accomodation and food service activities.

“The five percent YoY growth in employment in Q2 (second quarter) should feed into H2 (second half) income and spending,” the two institutions said.

They said the slowdown in inflation for the sixth consecutive month in July to 4.7 percent also sets a favorable scenario for reducing interest rates, which should stimulate economic growth.

The two institutions, however, expect inflation to rise in August, citing crude oil and rice prices have gone much beyond their levels in July, and the impact of monsoon rains and typhoons on vegetable and fish products.

Barring a possible jump in rice and oil prices, they said inflation should continue its downtrend.

“Given these risks, we have upped our full year inflation forecast back to 5.7 percent from 5.5 percent last month,” FMIC and UA&P said.

Inflation averaged 6.8 percent in the January to July period, above the Bangko Sentral ng Pilipinas’ two to four percent target range.

FMIC and UA&P said the economy is also expected to get a boost as the government ramps up infrastructure spending in the second half.

They said the contribution from the external sector, including exports to the economy, will be minimal with the global economic slowdown unlikely to improve significantly in the near future.

“Thus, the balance of trade deficits will remain elevated and, together with the US dollar’s renewed strength, should put continued pressure on the peso for the rest of Q3 (third quarter),” they said.

Earlier, National Economic and Development Authority Secretary Arsenio Balisacan said the economy would have to grow by 6.6 percent in the second semester to meet the lower end of the government’s growth target for this year.

He said the government’s growth target remains achievable citing government agencies’ catch up spending, as well as measures being implemented to address inflation and encourage investments into the country.