The Department of Finance expects the Philippine economy to rebound in the succeeding quarters after a slower-than-expected growth of 6 percent in the second quarter on soaring capital formation and strong recovery of exports.
Finance Undersecretary and chief economist Gil Beltran said another factor that could boost the economy ahead would be the construction industry related to the ambitious “Build, Build, Build” program of the government.
“There is silver lining amid the slowdown. First, capital formation soared to 20.7 percent on the back of strong 28.6 percent acceleration in durable equipment. Second, exports of goods and services recovered to a double-digit growth of 13 percent from 6.5 percent in the first quarter amid a rebound in electronics components,” he said.
Beltran said consumer electronics and office equipment also showed triple-digit expansions.
“These imply that the economy will be able to recover lost ground in the next quarter as the equipment and factories set up in the second quarter will start operations. Also, the rise in the goods trade deficit will be sustainably financed by a growing services trade surplus,” Beltran said.
He said the government was keeping its eye on the bigger picture that growth should be driven by investment.
“Public construction has accelerated to 22.1 percent in 2018 S1 (first semester), more than double the 2017 S1 growth of 9.3 percent. Private construction is also picking up,” he said.
Beltran added the government should keep its focus on enhancing the country’s long-term prospects by increasing the economy’s productive capacity (through infrastructure and social services) while maintaining macroeconomic stability.
Economic growth slowed down in the second quarter to 6 percent from the revised 6.6 percent in the first quarter, pulled down mainly by faster inflation, closure of Boracay and mining operations, persisting trade imbalance and a “stagnant” agricultural sector.
The growth was also slower than 6.7 percent a year ago. The figure brought the average GDP growth in the first half to 6.3 percent, way below the lower limit of the target range of 7 percent to 8 percent this year.
Economic Planning Secretary Ernesto Pernia said growth could have been more robust and possibly settled within the target range if inflation was more subdued during the period.
Inflation in the first six months averaged 4.3 percent, or above the target range of 2 percent to 4 percent set earlier by the country’s economic managers.
President Rodrigo Duterte in late May ordered the closure of the island resort of Boracay in Aklan to rehabilitate it and prevent its further degradation due to commercialization.
A number of mining operations, meanwhile, were suspended and shuttered during the time of former Environment Secretary Gina Lopez, especially those engaged in open-pit mining.
But Pernia said during a radio interview on Friday the expected resumption of operations of Boracay island sometime in October would attract more tourists that could help make the economy rebound strongly in the fourth quarter.