MANILA, Philippines – Economic growth could have remained “very good” in the second quarter, a senior central bank official said, as he outlined reasons why domestic demand supported expansion amid lackluster trade performance.
“For us, the outlook never changed: we continue to see a good economic turnout in economic performance,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said Friday.
“That is, very good economic performance,” he told reporters.
The Philippine economy expanded by 7.8 percent in the first three months of the year, beating market expectations to become Asia’s fastest growing economy for that period.
The Aquino administration has set a six- to seven-percent growth target this year. The local economy grew 6.8 percent last year.
From April to June, Guinigundo said domestic demand could have been boosted by the continued expansion of business in the manufacturing sector in time for the election season.
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Based on latest Purchasing Managers Index figures, the manufacturing gauge went up to 58.6 in June from 56 the previous month, indicating faster expansion. Any figure above 50 means growth.
Manufacturing is part of the industry sector, which grew 10.3 percent in the first quarter, the fastest among other industrial origins.
“In the last so many quarters, we have noticed a big rebound in capital expenditures, capital investment, and domestic capital investments. These could ensure growth is sustainable in the long run,” Guinigundo explained.
In addition, business and consumer sentiments have improved, he said, providing support for more expansion of businesses and infrastructure.
The Consumer Confidence Index (CI) – though still in the negative territory showing more pessimists – showed a “trend that is going up” with the second quarter figure hitting a new record-high of -5.7 percent.
Consumer optimism, Guinigundo said, has translated to more vehicles and energy sales.
The CI’s counterpart on the Business Expectations Survey, meanwhile, also surged to a new all-time high of 54.9 percent during from April to June “which could support expanding employment.”
Guinigundo said demand-driven growth has been supported by a “benign” inflation of three percent as of May, “adequate” liquidity in the system and a global recovery that “continues to proceed.”
He reiterated that the growth capacity of the Philippine economy has evolved to six- to seven-percent from just four- to five-percent a decade ago.
“The economy is growing beyond the short-term average… We believe that the economic growth that we are seeing is something that is sustainable,” Guinigundo said.