Philippine GDP Growth at Three-Year Low Misses All Estimates

(Bloomberg) -- Economic growth in the Philippines weakened to a three-year low last quarter, missing all economists’ estimates. Stocks and the peso fell.

Key Points

  • Gross domestic product rose 6 percent in the second quarter from a year earlier, the Philippine Statistics Authority said in a briefing in Manila. That was the weakest pace since 2015, according to data compiled by Bloomberg
  • The median estimate in a Bloomberg survey of 19 economists was 6.6 percent; growth slowed from 6.6 percent in the first quarter
  • Compared with the previous quarter, GDP grew 1.3 percent

President Rodrigo Duterte is building roads and railways, including a subway in traffic-clogged Manila, to boost the economy, which the government is targeting to expand 7 percent to 8 percent for this year. Economic Planning Secretary Ernesto Pernia told reporters on Thursday the economy needs to grow 7.7 percent in the second half to meet this year’s goal.

The surprise slowdown last quarter may not be enough to halt the central bank from hiking interest rates on Thursday, given a surge in inflation to the highest in more than five years. But it throws in doubt whether Governor Nestor Espenilla can deliver on a pledge to take “strong action” with a bigger-than-usual interest-rate hike of 50 basis points, as most economists in a Bloomberg survey had predicted before the release of the GDP data.

Philippine GDP Growth at Three-Year Low Misses All Estimates

“We are still sticking to a 50 basis-point call,” said Angelo Taningco, an economist at Security Bank Corp. in Manila. “They need to combat inflation or else there’ll be greater impact on second-half growth.”

The benchmark stock index slid 0.8 percent, erasing earlier gains. The peso fell 0.1 percent to 53.11 per dollar.

Other Details

  • Consumer spending, which accounts for about 60 percent of the economy, rose 5.6 percent in the second quarter from a year earlier
  • Government spending gained 11.9 percent
  • Agriculture production rose 0.2 percent

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