Our economy grew just grew 4.3 percent year-on-year in the second quarter of 2023 amid the challenging global environment and elevated inflation and interest rates. It is slower than the 6.4 percent in the first quarter, bringing the average expansion in the first semester to a still impressive 5.3 percent.
Government spending was also lower than expected. Based on Oxford Economics’ analysis, the 7.1-percent contraction in government spending in the second quarter shaved off 1.3 percentage points from the headline growth. The resumption of school classes later in August will hopefully lead to higher household spending in the third quarter. This is the time for students to purchase school uniforms and other clothes, bags and school supplies. The expenditures will certainly lift the retail and manufacturing sectors.
Other indicators also point to a more inclusive growth in the second quarter, as the employment level reached a record high in June, while tourism rebounded significantly, leading to the reopening of hotels, restaurants and other establishments. International credit rating agencies remain confident about the Philippine economic prospects. Per Finance Secretary Benjamin Diokno, the Philippines has returned to the path of an “A” investment-grade rating after showing its resilience during the Covid-19 pandemic.