Philippines raises second-quarter GDP estimate as growth remains below target

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Philippines Q2 GDP revised

Highlights

Philippine Statistics Authority revises Q2 2023 GDP growth to 2.4% from 2.3% due to higher trade, agriculture, and transportation contributions.
Economy expands 2.6% in H1, falling below the government’s 3.5% to 4.5% annual target and marking the weakest post-pandemic quarterly growth in over 16 years.
BusinessWorld poll projects median Q3 GDP growth at 2.7%, implying a three-quarter average of approximately 2.6% ahead of Nov. 9 data release.

Second-quarter revision and sector drivers

As reported by BusinessWorld, citing the Philippine Statistics Authority, gross domestic product growth in the April-to-June quarter is revised to 2.4% from the preliminary 2.3%, reflecting higher estimates for trade, agriculture, and transportation-related activity.

Wholesale and retail trade, including the repair of motor vehicles and motorcycles, is revised to 4.7% from 4.6%. Agriculture, forestry and fishing growth is raised to 2.9% from 2.7%, while transportation and storage is adjusted upward to 4.1% from 3.8%.

Despite the change, the second-quarter result remains below the 5.5% expansion recorded a year earlier and the 2.8% growth posted in the first quarter. The Philippine Statistics Authority says revisions to GDP estimates follow an approved policy aligned with international standards on national accounts revisions.

Pressure on annual targets and upcoming data

Even after the upward adjustment, the economy expands by 2.6% in the first half, below the government’s 3.5% to 4.5% target for the full year. The second-quarter figure also remains the weakest growth reading since the 3.8% contraction in the first quarter of 2021 during the pandemic, and, excluding the pandemic years, the softest pace in more than 16 years.

Gross national income growth in the second quarter is left unchanged at 2.2%, while growth in net primary income from the rest of the world is revised down to 0.8% from 1.0%. The Philippine Statistics Authority is scheduled to release third-quarter GDP data on Nov. 9.

A BusinessWorld poll of 16 economists and analysts shows a median estimate of 2.7% growth for the July-to-September period. If that figure is realized, average GDP growth in the first three quarters would be about 2.6%.

Our earlier coverage of the Philippines’ planned peso-denominated government bond pricing reforms and expected inclusion in J.P. Morgan’s Government Bond Index-Emerging Markets explained how these steps could widen the investor base and improve liquidity. We also noted that cheaper borrowing and stronger market participation won’t automatically translate into higher productivity or business investment unless they are reinforced by fiscal credibility, deeper domestic capital markets, and broader structural reforms that improve the operating environment.

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