The government remains optimistic that the economy will meet its growth targets this year despite the effects of surging prices, the country's limited fiscal space, and the slowdown of global demand, Socioeconomic Planning Secretary Arsenio Balisacan said.

"The domestic consumption and investment on the demand side, as well as the services sector on the supply side, has propelled the Philippine economy forward as consumers and businesses are already adjusting their economic decisions and expectations to the new normal," Balisacan said before members of the Foundation for Economic Freedom recently.

"The most recent data showed household consumption contributes a significant 85 percent of economic growth on the demand side, while the services sector contributes about 67 percent to growth on the supply side," Balisacan added.

Both components are growing faster than the overall economy, indicating that their shares in GDP (gross domestic product) are expected to increase further. Gross fixed capital formation or investment is also exhibiting a solid performance, he said.

Expansion must hit 5.3%

Moreover, Balisacan said that the Philippine economy needs to grow by at least 5.3 percent in the second half of 2022 to meet the lower bound of the 6.5-percent to 7.5-percent target set by the Development Budget Coordination Committee for the year.