4.3% GDP growth in Q2 slowest in 2 years T HE economy’s latest performance may have taken the wind off the government’s sails as GDP growth reached 4.3 percent in the second quarter, the slowest in two years. Part of the reason for the slower economic performance was the government itself, according to National Economic and Development Authority (Neda) Secretary Arsenio M. Balisacan. He said in the bidget hearing that if only the spending targets of the government were met, GDP in the second quarter could have reached 5.6 percent. Data from the Philippine Statistics Authority (PSA) showed that
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Government Final Consumption Expenditure [GFCE] contracted 7.1 percent, the lowest since the first quarter of 2011 when it contracted 15 percent. Speaking partly in Filipino, in a briefing on Thursday, he traced the slow growth in the Government Final Consumption Expenditure to, “partly because of the election-related spending that I mentioned earlier,” adding: “The figure was high last year because of the election. [Also] part of the fiscal consolidation, I am sure we will address or we will make sure that the fiscal deficit, the debt, [are] at the level that we are targeting.” Balisacan added, “Since there
was a lot of spending during the pandemic and also during the election, we now have to consolidate and that's why you see slower growth in government consumption expenditure. But that should go to its normal pace in the latter part of the year, particularly (in) the next year.”
Slowest since 2021
The growth in the second quarter is the slowest since the first quarter of 2021 when the economy contracted 3.8 percent. Given this lack luster GDP growth, Balisacan said the economy needs to post growth of 6.6 percent in order to achieve the tar-
get rate of 6-7 percent for the year. To attain this, he said the government will endeavor to “recover our growth momentum.” This will be done by accelerating government programs and projects, including the delivery of public services, under the 2023 national budget. The Neda chief said the Economic Development Group (EDG) is now discussing ways for government to expedite these programs and projects. Fiscal stimulus programs, he added, will be rolled out to improve the productive capacities of the private and public sectors; See “GDP,” A2
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Friday, August 11, 2023 Vol. 18 No. 298
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IN Q2 GROWTH SLOWING FROM HARVEST TO HAVOC The once-productive rice fields of San Simon in Pampanga now resemble a swamp, a result of the water accumulation unleashed by the preceding Typhoons Egay and Falcon, worsened by the force of the Southwest Monsoon rains. The devastation resulted in agricultural destruction and financial losses amounting to approximately P2.9 billion, as reported by the National Disaster Risk Reduction and Management Council. NONIE REYES
By Cai U. Ordinario
T
@caiordinario
HE impact of the tight monetary policy of the Bangko Sentral ng Pilipinas (BSP) could last until the end of the year as the economy is already feeling the “heat” brought in by higher interest rates. Socioeconomic Planning Secretary Arsenio M. Balisacan pointed this out on Thursday, as the statistical body reported the slowing down of growth in the second quarter to 4.3 percent. According to Balisacan, the 425-basis-point increase in interest rates since last year had lagged effects. The tight monetary policy was included by the director general of the National Economic and Development Authority (Neda) among the reasons for the lackluster performance of the Philippine economy in the second quarter of 2023. “The lagged effects of the uptick in interest rates last year and this year, we are feeling that now, especially in investment and even in households purchases of
durable goods—those can be felt now because people postponed their spending on durable goods,” Balisacan said, partly in Filipino. Based on data from the Philippine Statistics Authority (PSA), household final consumption expenditure (HFCE) slowed to 5.5 percent from 8.5 percent in the second quarter last year and 6.4 percent in the first quarter of 2023. Gross capital formation contracted 0.04 percent in the second quarter of 2023. Under this, construction slowed significantly to 2.1 percent from the 15.3 percent in the second quarter last year and 14.6 percent in the first three months of 2023. See “Interest,” A2
DENR TO ORDER ‘STOP-WORK’ FOR MLA BAY RECLAMATION By Jonathan L. Mayuga @jonlmayuga
& Samuel P. Medenilla
E
@sam_medenilla
N V I RON M E N T S e c retary Maria Antonia Yulo-Loyzaga said an order stopping all land reclamation activities in Manila Bay will be issue shortly in compliance with President Ferdinand Marcos Jr.’s suspension order. At a press conference in Malacañang on Thursday, the chief of the Department of Environment and Natural Resources also clarified that all 22 land reclamation projects are suspended pending a cumulative review to determine the soundness of the projects. “We have been obligated to do [the review] by the Supreme Court. We need to do the review of these projects,” said Loyzaga. She said 22 land reclama-
tion projects were approved during the Duterte administration before she took the helm of the DENR , which regulates the issuance of ECC for environmentally critical projects like land reclamation in environmentally-critical areas such as Manila Bay, an economically important water body and major fishing ground in Luzon. Manila Bay straddles cities and municipalities from the provinces of Cavite, Bulacan, Pampanga, and Bataan, and covers the entire National Capital Region (NCR). T he s u s p e n s ion ord e r, which took effect upon Marcos’s verbal order and public pronouncement during a site inspection in Bulacan, will be communicated to the project proponents, the DENR chief added. See “DENR,” A2
FDI down 34% to $488M in May ’23, BSP reports
H
IGH global inflation and interest rates has cost the Philippines much-needed Foreign Direct Investments (FDI) in May 2023, according to the Bangko Sentral ng Pilipinas (BSP). Data from the BSP said FDI net inflows reached $488 million in May 2023, a 34-percent decline from the $739-million net inflows posted in May 2022. On a cumulative basis, FDI net inflows for the period January-May 2023 contracted 20.8 percent to $3.4 billion from the $4.3 billion net inflows posted in the same period in 2022. “FDI remains subdued due to the effects of relatively higher price and interest rate levels globally,” BSP said. The decline in FDI net inflows, BSP said, also reflected the 70.7- percent contraction in non-residents’ net investments in debt instruments to $161 million from $551 million in the same month last year. Meanwhile, non-residents’ net investments in equity capital other
than reinvestment of earnings increased by 158.7 percent to $235 million from $91 million in May 2022. “Equity capital placements originated mostly from Germany, Japan, and the United States. These were invested largely in the manufacturing and real estate industries,” BSP said. In May, the top investors came from Germany, Japan, and the United States. The top investors for the first five months of 2023 came from Japan, Germany, and Singapore. Manufacturing accounted for 76 percent of all FDIs in May 2023 followed by Others at 14 percent and Real Estate at 10 percent. In the January to May 2023 period, data showed Manufacturing accounted for 54 percent of the FDIs. This was followed by Others at 21 percent; Real Estate, 15 percent; and Financial and Insurance industry, 11 percent. See “FDI,” A2
PESO exchange rates n US 56.2980 n japan 0.3918 n UK 71.6223 n HK 7.1985 n CHINA 7.8068 n singapore 41.8231 n australia 36.7626 n EU 61.7983 n KOREA 0.0429 n SAUDI arabia 15.0156 Source: BSP (August 10, 2023)