Condominium buildings are seen in Manila amid dark rain clouds, April 14, 2023. — PHILIPPINE STAR/MIGUEL DE GUZMAN

MANILA – The Philippine economy slowed for a third straight quarter in April-June from last year, the statistics agency said on Thursday, dragged down by higher commodity prices and slower government and consumer spending.

Gross domestic product (GDP) in the June quarter rose 4.3%, losing further momentum after the previous quarter’s 6.4%, which was slower than the December quarter’s 7.1%.

On a quarter-on-quarter basis, the economy contracted 0.9% in the second quarter, weaker than the 1.1% expansion in the March quarter and missing a 0.5% growth forecast of economists.

The country’s economic ministers said the weaker performance was due to higher prices of farm goods deterring consumer spending, plus a contraction in government spending compared to the same period a year earlier, when an election was held.

“For the second quarter, the moderate economic expansion was driven by increases in tourism-related spending and commercial investments, but was tempered by high commodity prices, the lagged effects of interest rate hikes, the contraction in government spending, and slower global economic growth,” they said in a statement.

The slower than expected growth in the second quarter will weigh on the policy review of the central bank, which will meet on Aug. 17 to decide whether to resume raising rates or extend its rate hike pause.

The ministers said an improving inflation outlook boded well for an easing of interest rates, and government spending would accelerate in the coming quarters and they aimed to ensure overall price stability amid upside risks.

Growth in the June quarter brought first half expansion to 5.3%, below the government’s 6.0%-7.0% target for the year. Even so, Economic Planning Secretary Arsenio M. Balisacan said the full-year target was still attainable.

“We firmly believe that the prospects of the Philippine economy remain strong and positive,” the economic ministers said in a statement read by Mr. Balisacan at a press conference.

ING Economist Nicholas T. Mapa said the central bank, which will meet on Aug. 17 to review policy, “will need to consider a pause” to support growth.

The BSP has kept interest rates steady PHCBIR=ECI at 6.25% at its last two meetings after nine rate hikes totaling 425 basis points in efforts to bring inflation back to within the 2%-4% target band. — Reuters