Moody’s unit sees 6.3 percent GDP growth in Q2

MANILA, Philippines — The Philippine economy is expected to grow by 6.3 percent in the second quarter, faster than the 5.7 percent expansion in the first quarter and 4.3 percent a year ago, according to Moody’s Analytics.

In its weekly report, Moody’s said that low base effects supported the gross domestic product (GDP) growth in the second quarter.

“A year earlier, growth slowed substantially to 4.3 percent, and in quarter-on-quarter terms, GDP went backwards,” it said. “This time, robust goods exports and government spending should drive growth.”

Government spending jumped by 14.6 percent to P2.76 trillion in the second quarter, data from the Bureau of the Treasury showed.

Meanwhile, exports from January to May rose by 7.8 percent to $30.84 billion from $28.61 billion in the same period in 2023. For May alone, the country’s total merchandise export sales dipped by 3.1 percent to $6.33 billon from $6.53 billon in the same month last year.

However, Moody’s Analytics said that private consumption and investment growth could “stay muted” as high interest rates continue to weigh on budgets.

A slower increase in tourist arrivals could also drag down service exports in the second quarter.

At 6.3 percent, Moody’s forecast could bring first-half growth to an average of six percent, hitting the government’s lower end of its six to seven percent target for the year.

On the other hand, Moody’s Analytics projects inflation to hit 3.7 percent in July, unchanged from June and below the four to 4.8 percent forecast of the Bangko Sentral ng Pilipinas.

If realized, this would mark the eighth straight month that inflation settled within the central bank’s two to four percent target.

The Philippine Statistics Authority will release the July inflation data today and the second-quarter GDP data on Thursday.

“A year earlier, growth slowed substantially to 4.3 percent, and in quarter-on-quarter terms, GDP went backwards,” Moody’s said. “This time, robust goods exports and government spending should drive growth.”