Philippines economy grows less than expected in second quarter

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Philippines economy grows less than expected in second quarter

The Philippine economy grew less than anticipated in the second quarter but at a pace that is still in line with the official 2022 growth target, giving the central bank leeway to tighten monetary policy to curb red-hot inflation.

In the June quarter, the country's gross domestic product was 7.4% higher than a year earlier, growing slower than the downwardly revised 8.2% annual rate seen in the previous quarter and the median 8.6% forecast in a Reuters poll.

It was the slowest growth in three quarters but the second-fastest in Asia for the second quarter, according to Economic Planning Secretary Arsenio Balisacan.

The Bangko Sentral ng Pilipinas BSP has flagged the possibility of raising key interest rates by 50 basis points at its Aug. 18 policy meeting, confident that the economy can withstand a less accommodative policy.

Since the beginning of the year, interest rates have risen by 125 basis points to tame inflation, which soared to its fastest pace in nearly four years in July.

The second quarter growth rate was due to strong construction and household consumption, among other factors, according to Balisacan.

He said the country's economic recovery was strong, with the second quarter performance in line with this year's growth target for full-year GDP of 6.5% to 7.5%.

The administration of President Ferdinand Marcos, whose six-year term began on June 30, is further targeting growth in full-year GDP of 6.5% -- 8.0% annually from 2023 to 2028.

Marcos, who is currently Agriculture Secretary, has pledged to turn the farm sector into an engine of growth and to focus on fiscal management and infrastructure upgrades to sustain the economy's rebound from the Pandemic.