MANILA, Philippines (3rd UPDATE) – As agriculture recovers and government spending picks up, the country's gross domestic product (GDP) grew 6.5% in the 2nd quarter of 2017, recovering from a slowdown for the past 3 quarters.
The Philippine economy grew faster to 6.5% in the 2nd quarter of 2017, an increase from the 6.4% growth during the 1st quarter of 2017, but still a decline from the 7% in the 2nd quarter of 2016, the Philippine Statistics Authority (PSA) said on Thursday, August 17.
The country's agriculture sector grew 6.18% in the 2nd quarter of 2017, breaching the Department of Agriculture's forecast of 5%.
Meanwhile, government spending went up to 5.6% in the 2nd quarter of the year, from 4% in the 1st quarter. (READ: Under Duterte, is PH economy in good hands?)
PH ahead of ASEAN so far, behind China
Should economists' targets be realized, the Philippines' 2nd quarter economic growth would slip further behind India as well as China.
As of now, the 6.5% growth in GDP places the Philippines ahead of other Southeast Asian nations that have released their GDP figures for the 2nd quarter.
However, the "Philippine GDP growth rate is second only to China so far among major Asian economies," Socioeconomic Planning Secretary Ernesto Pernia said.
India, Malaysia, and Thailand have not announced their 2nd quarter GDP growth yet. (READ: PH seen to remain fastest-growing economy in ASEAN-6 for 2017)
The economic team of President Rodrigo Duterte targets an economic growth of 6.5% to 7.5% for full-year 2017, to maintain the Philippines' position as one of the fastest growing in Asia.
"We are well on track to meeting our full-year target growth of 6.5 to 7.5%," Pernia said. "Given the performance of the economy in the 1st half of the year, we only need to grow by 6.5% to meet at least the lower bound of our full-year target of 6.5 to 7.5%."
Over the next 6 years, the government is targeting GDP growth within a 7% to 8% range annually.
Duterte's economic managers have pledged to spend P8.4 trillion on infrastructure until 2022, which is expected to further boost GDP growth.
Tax reform, infra play crucial role
For Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr, the "economic momentum during the 1st half of the year alongside favorable business and consumer sentiment should augur well for the expansion of the economy over the near to medium term."
Investment bank Nomura Securities, meanwhile, said "more progress on infrastructure spending" should continue to crowd in private investment, a move seen to boost the country's economic growth.
With a vibrant services sector, strong consumer spending, and stable inflation, Duterte has inherited an economy that is in good health. What has been a cause of worry for some investors is the administration's implementation of its ambitious infrastructure program – which, if successful, would sustain economic growth in the next decade through massive public spending.
To fund the infrastructure program, the comprehensive tax reform package should be implemented soon. Tax reform is a key component of Duterte's 10-point socioeconomic agenda.
Finance Secretary Carlos Dominguez III expressed hope that the Senate would help the government meet its GDP growth target for 2017 by passing "soon enough – and in full – its own version of the comprehensive tax reform package, which would help spell the financial sustainability of its accelerated spending on infrastructure as well as on human capital formation and social protection for the poor and other vulnerable sectors."
On Thursday, the main Philippine Stock Exchange index (PSEi) climbed 26.16 points or 0.33% to 8,072.75 points – its highest in over a year, after investors took the 2nd quarter GDP growth results positively. It was on July 27, 2016 when the PSEi ended at 8,100.48 points. – with research from Sofia Tomacruz / Rappler.com