ANALYSTS on Friday raised concerns over the country’s growth outlook following weaker-than-expected second-quarter results, which were also said to have complicated the monetary policy path of the Bangko Sentral ng Pilipinas (BSP).
DragonFi Securities research analyst Jarrod Tin, who blamed subdued public spending and elevated energy costs as causing the slowdown, said the 2.3-percent result — well below the government’s 3.5- to 4.5-percent target — had made further rate cuts to combat inflation harder to justify.
A meaningful pickup in public infrastructure spending is needed to reignite economic growth, he said, adding that without it, there was no clear catalyst for a rebound.
Tin also expects the broader stock market to turn more risk-off following the weak GDP print, favoring a stock-picker’s market where only a handful of companies are likely to outperform.
Rizal Commercial Banking Corp. chief economist Michael Ricafort, meanwhile, also tagged the continuing impact of last year’s flood control project scandal and the effects of the war in the Middle East.
Catch-up government spending, particularly on infrastructure, could help support growth later in the year provided governance standards improve, he added.
Ricafort echoed Tin in saying that the softer growth could temper the urgency for further BSP rate hikes, but added another increase could not be completely ruled out given elevated inflation.
Robert Dan Roces, group economist of SM Investments Corp., offered a more measured assessment, saying the weakness was concentrated in rate-sensitive portions of the economy, particularly investment and industry, while consumer activity remained relatively resilient.
He described the slowdown as a “cyclical soft patch, not a structural one,” citing easing inflation and the impact of wage adjustments.
John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, stressed the need to sustain efforts to support investment, accelerate productive infrastructure projects, strengthen human capital and improve productivity.
Union Bank of the Philippines chief economist Ruben Carlo Asuncion, meanwhile, said the BSP faced a balancing act between supporting economic activity and maintaining price stability.
“If the recent easing trend in inflation is sustained, the BSP could gain greater flexibility to place more weight on growth considerations in the coming months,” he said.
For the stock market, Asuncion said the implications were mixed, noting that slower growth could weigh on earnings expectations, particularly for cyclical sectors.
Chinabank Research, which tagged weak consumption and softer investment as having dragged growth to its lowest level since 2009, said the economy could post a modest recovery in the second half but added that the expansion may only reach the low end of the government’s 3.5- to 4.5-percent target.
It also expects the BSP to deliver one final 25-basis-point rate hike in August despite the elevated inflation environment.
‘Important opportunities’
The Makati Business Club (MBC), meanwhile, said commitments outlined by President Ferdinand Marcos Jr. during last month’s State of the Nation Address provided “important opportunities” to address structural issues and boost the economy’s resilience.
“Realizing these opportunities will require not only timely implementation but also policy coherence, consistency and coordination across government to provide business and investors with greater certainty,” MBC Executive Director Julia Abad said.
“By advancing reforms that enhance competitiveness, encourage private sector investment and create quality employment opportunities, the Philippines can better navigate current challenges and sustain a more inclusive and resilient economic growth trajectory,” she added.
The Federation of Free Farmers, for its part, warned that the impact of war in the Middle East had yet to fully manifest in the economy.
Changes to harvesting and planting schedules were likely the main reason for agriculture’s 2.7-percent growth in the second quarter, FFF national manager Raul Montemayor said.
"For the first semester, palay output value in real terms was actually negative 0.5 percent,” he claimed, adding that total production for the period, at 9.024 million tons, was actually lower than the 9.077 million tons seen a year earlier.
"The effects of high oil and fertilizer prices on palay and similar crops are not yet fully evident in the first semester results since most of the crops harvested during the period were planted before prices went up,” Montemayor continued.
“We will see a larger impact in the crops being planted at present and which will be harvested starting September and when El Niño peaks in the fourth quarter, it will put in peril the plantings later in the year that will be harvested in the first half of 2027,” he added. NAZYLEN JOY MABANGLO WITH REPORTS FROM GISELLE JORDAN AND CHYNNA GRACE ONG
