Philippines: Philippine economy accelerates further in Q2 on the back of strong domestic demand
August 18, 2016
In the second quarter of this year, GDP expanded 7.0% over the same period last year. The reading exceeded the revised 6.8% rise recorded in Q1 (previously reported: +6.9% year-on-year) and beat market expectations of a 6.8% increase. In addition, the reading marked the fastest expansion in three years.
Q2’s acceleration was mainly driven by increases in private and government consumption. Conversely, fixed investment slowed slightly and the external sector’s drag on growth intensified. Total consumption expanded at the stronger pace of 8.2% in Q2 (Q1: +7.7% yoy), marking the best result since Q1 2012. Private consumption also strengthened, speeding up from 7.0% growth in Q1 to a 7.3% increase in Q2, which represented the highest growth rate on record. Moreover, public consumption growth accelerated from Q1’s 11.8% to an outstanding 13.5% in Q2. Fixed investment, albeit decelerating slightly, remained a bright spot, growing a remarkable 27.2% in Q2 (Q1: +28.2% yoy).
In the external sector, exports of goods and services expanded 6.6% in the second quarter, which was down from the 7.3% increase observed in Q1. Conversely, imports sped up from a 19.0% increase in Q1 to an even more impressive 20.9% rise in Q2. As exports weakened while imports gained further momentum, the external sector’s net contribution to overall economic growth deteriorated, falling from minus 5.7 percentage points in Q1 to minus 7.0 percentage points in Q2. The external sector had not performed that badly in 15 years.