THE Philippine economy continues its rebound trajectory, growing 7.4 percent in the second quarter, marking the fifth consecutive quarter of growth since the country went into recession at the height of the pandemic.
This follows the revised 8.2 percent gross domestic product growth rate posted in the first quarter of the year.
The country’s chief economist Arsenio Balisacan said the country’s recovery from its most significant economic and health challenge remains strong due to improved risk management as more social and economic activities have been allowed. “For the remainder of the year, we must apply the same or even better risk management protocols and protect the most vulnerable against high inflation and other shocks and scarring due to Covid-19,” the National Economic and Development Authority secretary said.
The second quarter growth still places the country as the second best-performing nation among the region’s major emerging economies that have released their second quarter reports.
“Our country is next to Vietnam’s 7.7 percent but faster than Indonesia’s 5.4 percent and China’s 0.4 percent. This performance also remains in line with our expectations, or our expected 6.5 to 7.5 percent growth in 2022,” he said.
Timely changes in Covid-related policies, such as easing alert levels, removing tourism restrictions, and accelerated vaccine rollout, helped increase economic activities. As of June 2022, around 85 percent of the economy is already under Alert Level 1. That these changes were implemented during the recently held national and local elections demonstrates that, indeed, living with the virus is possible.
All sectors on the production side expanded in the last quarter, driven by the services and industry sectors at 9.1 percent and 6.3 percent, respectively. Transport, accommodation, food service, and other services have shown continued yet slow signs of recovery to their pre-pandemic levels. Meanwhile, the agriculture sector remained weak at 0.2 percent growth as the sector remains vulnerable to natural calamities and rising input costs.
Given the agriculture sector’s 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.
Meanwhile, the manufacturing sector’s growth decelerated to 2.1 percent in the second quarter, down from 22.4 percent in the same quarter last year. 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.
“We are also pleased to note the recovery of the services sectors that have been hit hard by the Covid-19-induced restrictions,” he said.
The trade sector grew by 9.7 percent in the second quarter from 5.4 percent in the same period last year. The increase in foot traffic in retail and recreation centers, given improvements in mobility and easing of border restrictions, supported the faster growth in wholesale and retail trade.
The transport sector exhibited faster growth of 27.1 percent this year from 24.3 percent in the same period last year. Both accommodation and food and beverage service activities sustained double-digit expansion during the reference period.
“The full reopening of the economy will indeed generate more income-earning opportunities. But the purchasing power of that income may be eroded by the high inflation, primarily resulting from increased fuel and food costs. Consequently, the government is focused on ensuring food security and reducing transport, logistics, and energy costs,” Balisacan said.