The Philippine economy likely expanded by 8.8 percent in the second quarter, faster than the revised 8.2 percent in the first quarter, despite the slump in agriculture sector, Moody’s Analytics, a unit of Moody’s Corp., said in a report Monday.
Moody’s Analytics made the projection following the slight downward revision in the first-quarter GDP growth to 8.2 percent from the preliminary estimate of 8.3 percent and the release of second-quarter agriculture performance, which showed a 0.6-percent contraction in the second quarter.
“Increases in the value of production in livestock and poultry were noted during the period. On the other hand, value of production in crops and fisheries dropped,” the Philippine Statistics Authority said.
Crops harvests declined 2.8 percent, while fisheries contracted 2.3 percent in the April to June quarter. Livestock posted a 2.1-percent growth while poultry went up by 7.8 percent.
“Philippine GDP growth will likely hit 8.8 percent year on year in the June quarter. This follows four quarters of spectacular growth that have put the country on track to comfortably meet its GDP growth target of 7 percent to 9 percent in 2022,” Moody’s Analytics said.
“Private consumption and investment will buoy second-quarter growth,” it said.
It said higher inflation, rising interest rates and fiscal consolidation would temper the economic expansion in the second half.
The government is set to release the second-quarter GDP data today.
Moody’s Analytics earlier said the economy largely withstood the Omicron-led surge in COVID-19 cases at the start of the year. The government in January this year transitioned to endemic strategies and allowed international travelers to return that bolstered services employment. Higher mobility and the unleashing of pent-up demand drove domestic consumption in the quarter.
The PSA said unemployment rate in June eased to 6.0 percent from 7.7 percent a year ago, as more than 1.5 million Filipinos joined the labor force that brought total employment to 46.6 million as of end-June.
Moody’s Analytics said the risks to the growth outlook are tilted to the downside, amid the rising inflation rate.
Latest data showed that inflation in July accelerated to a 45-month high of 6.4 percent from 6.1 percent in June, driven by faster increases in the prices of food, non-alcoholic beverages and higher transport fares.
The July outturn was faster than 3.7 percent in July 2021. This brought the average inflation in the first seven months to 4.7 percent, above the target range of 2 percent to 4 percent.
The International Monetary Fund also raised the 2022 GDP growth projection for the Philippines to 6.7 percent from the 6.5 percent estimate made in April on the back of robust recovery in the first quarter.
IMF resident representative to the Philippines Ragnar Gudmundsson said the growth momentum was expected to moderate in the second half of 2022 and in 2023, due to base effects, the impact of the war in Ukraine, slowdown in major trading partners, faster US monetary policy tightening and higher inflation.
The economy grew 5.7 percent in 2021, a turnaround from the 9.6-percent contraction in 2020.