It was not all bad news for the six percent growth in the second quarter that the usual yellow critics are now using to weaken Rody where he used to be impregnable, which is the economic aspect of his administration.
The twist on the growth outcome was that it was “policy” that resulted in the growth skid which snapped 10 consecutive quarters of expansion averaging at least 6.5 percent.
The blame is being put on the decision to close Boracay island, a major tourist draw and the Tax Reform for Acceleration and Inclusion (TRAIN) law which caused the spike in inflation.
The figure is already inconsistent with description of a “slowdown” since few big Asian economies can match the growth pace of the Philippines and the second quarter figure remained among the highest expansion clip in the region.
Criticisms on the six percent gross domestic product (GDP) expansion is similar to Sen. Antonio Trillanes IV calling the 70 percent or more survey rating on President Rodrigo Duterte as a sign of a withdrawal of support.
The latest figure, however, was still the lowest quarterly growth in three years and lower than government’s target of between seven and eight percent. It also missed forecast by economists of a 6.7 percent GDP growth for the period.
The economy needed to expand by 7.7 percent in the second half to meet the low end of the seven to eight percent growth target for this year.
The situation is not a source of worry based on Department of Finance (DoF) analysis of the growth curve.
Finance Undersecretary Gil Beltran said the economy merely took a breather in the second quarter as its growth decelerated from 6.6 percent in the first quarter.
Based on the DoF review, the main culprit of the deceleration is the slowdown in manufacturing to 5.6 percent from 7.6 percent in the first quarter and poor agriculture output that managed to expand by only 0.2 percent from 1.1 percent in the first quarter.
Beltran, however, cited silver linings which showed the slowdown is temporary.
He noted capital formation soared to 20.7 percent on the back of a strong 28.6 percent acceleration in durable equipment.
Capital formation measures the input to the economy of the tools needed for development such as machineries and commercial vehicles.
He also noted that exports of goods and services recovered to a double-digit growth of 13 percent from 6.5 percent in the first quarter amid a rebound in electronics components.
Consumer electronics and office equipment also showed triple digit expansions.
The figures showed the economy is expected to recover lost ground in the coming quarters when equipment and factories that were set up will start operations.
Also, the rise in the merchandise trade deficit will be sustainably financed by a growing services trade surplus, Beltran said.
Economic managers are keeping their eye on the bigger picture of sustaining strong growth which is possible through more investments.
Public construction has accelerated to 22.1 percent in the first half which was more than double the growth a year ago of 9.3 percent. “Private construction is also picking up,” Beltran said.
According to him, government will keep its focus on enhancing the country’s long-term prospects by increasing the economy’s productive capacity through the infrastructure build-up under “Build, Build, Build” and the provision of social services while keeping the economy stable.
While the inflation rate remains elevated, the broader GDP deflator-based inflation shows a 3.1 percent price increase for all consumer and investment goods.
Thus, a significant source of inflation is from the purchase of locally produced goods and those used to increase output of products.
Another major factor for the high inflation is the increase in excise tax on so-called sin products such as alcoholic drinks and cigarettes that are non-essentials.
The closure of Boracay to strengthen its tourism value best describes the temporary nature of the growth slowdown.