Philippine economy grows beyond forecast in Q2/2024. (Source: Eduphil)

Among the components of Gross Domestic Product (GDP), government spending increased 10.7% year-on-year, thanks to ambitious infrastructure projects, defense equipment upgrades and preparations for midterm elections in 2025.

Household spending, which accounts for 70-80% of GDP, grew just 4.6%.

Although the second-quarter growth was the fastest in the past five quarters, National Economic and Development Authority Secretary Arsenio Balisacan said household spending was weak, with growth not as strong as expected, as consumers felt the lagged effects of rising interest rates and high inflation.

The Philippine central bank kept its key policy rate at 6.5%. Meanwhile, consumer price inflation rose to 4.4% in July 2024, exceeding the 2-4% target.

Ahead of the quarterly release, the Philippine National Statistics Authority revised growth for the first quarter of 2024 to 5.8 percent, from 5.7 percent previously, as financial activities and wholesale and retail sales were revised upward.

Philippines GDP growth in the past two quarters averaged 6%.

If this trend continues, the country's economy could reach its growth target of 6-7% this year, among the fastest growing economies in Southeast Asia.