Economy slows down in Q2
6% growth misses 7% to 8% government target
The Philippine economy grew at a much slower pace in the second-quarter of the year as closure of the Boracay Island along with other government policy decisions dragged down its potentials for faster expansion.
The six-month closure of Boracay, the weak mining sector, and strict enforcement of fisheries laws pulled down the country’s Gross Domestic Product (GDP) growth rate to 6.0 percent in the second-quarter, below the government’s target of 7.0 percent to 8.0 percent.
The April to June GDP figure snapped 10 straight quarters of at least 6.5 percent growth.
It was also slower compared with the revised 6.6 percent in January to March and 6.5 percent registered in the same period last year.
In a briefing Thursday, Socioeconomic Planning Secretary Ernesto M. Pernia also said that the high inflation rate, which clocked in at 5.7 percent in August, was again a “spoiler,” and took a toll on GDP in the quarter ending June.
Pernia also admitted that 6.0 percent economic output growth was “less than what we had hoped for.”
It was also much less than the 6.6 percent that the market expected, pulling down stock prices in Thursday’s trading.
“The slowdown is partly due to policy decisions undertaken that are expected to promote sustainable and resilient development. We are referring to the temporary closure of Boracay from April to October, 2018, which partly made a dent on the economy,” Pernia said.
The closure of the world-famous tourist destination slowed the exports of services to 9.6 percent from 16.4 percent in the first quarter, the official noted.
Pernia also blamed the stricter regulations in mining sector, which resulted in the closure of several mining pits and the recent imposition of excise tax on non-metallic and metallic minerals, as factors to slower economic output.
The mining and quarrying sector declined by 10.9 percent in the secondquarter.
The strict enforcement of fisheries laws in Laguna Lake and an “almost stagnant” agriculture sector were cited as drags on growth, Pernia said.
“We are also gravely concerned about the almost stagnant output of the agriculture sector and this supports our premise that the main reason behind the high inflation is the gross deficiency in the domestic production of food, which was not augmented by imported goods especially rice,” he said.
During the quarter, palay, corn, sugarcane, and mango harvests for the quarter were dismal, while coconut including copra, livestock and poultry production also reported weak output.
But despite the lower than expected growth, the head of the National Economic and Development Authority (NEDA) said that the Philippines remains one of the best-performing economies in Asia.
The Philippines is after Vietnam at 6.8 percent growth and China at 6.7 percent, but ahead of Indonesia’s 5.3 percent.
The country now needs to grow at least 7.7 percent in the second semester to attain the low-end of the 7.0 percent to 8.0 percent target for 2018.
“We will have to double time our efforts in terms of encouraging the sectors to be more productive and efficient in their activities,” he said.
Pernia, meanwhile, defended the policy steps that weakened the country’s GDP, saying these “measures should ensure sustainable and longrun growth for the economy. These policy decisions were prudent and judicious.”
In the second-quarter, industry growth was slower at 6.3 percent as manufacturing softened on the back of strict regulations of controlled chemical and chemical products, coupled with the high rates charged by shipping companies for transporting chemicals.
On the supply side, electricity, gas and water supply moderated to 3.6 percent which may be associated with the weaker Manila Electric Co. sales and household spending for utilities.
Government consumption, meanwhile, recorded a slight deceleration at 11.9 percent from the 13.6 percent in the previous quarter, but l higher than the 7.6 percent recorded in the second quarter of 2017.
“The results were only because of lower disbursements for personnel services, maintenance and operating expenses, as well as subsidies despite the higher allocation to the local government units,” Pernia said.