The economy grew more slowly in the second quarter of the year, a disappointing development considering that the gross domestic product had expanded by at least 6.5 percent for 10 consecutive quarters.
Economic Planning Secretary Ernesto Pernia was circumspect in his assessment of the first-quarter GDP figures, but it was clear that certain sectors in the economy were slowing down the expansion. The economy grew “just” six percent in the April-June period, the weakest in three years, after expanding by an adjusted 6.6 percent in the first three months of 2018.
Pernia conceded that the slowdown is partly due to “policy decisions undertaken that are expected to promote sustainable and resilient development.” He referred to the temporary closure of Boracay Island in April after President Rodrigo Duterte described the famous tourist destination a “cesspool.”
Boracay attracts about two million tourists each year and pumps roughly $1 billion into the economy in terms of earnings from hotels, airlines, restaurants and other entertainment sources. Its closure led to canceled hotel bookings and airline tickets, displaced thousands of workers on the island and virtually killed the local economy.
Another dampener is agriculture’s lethargic 0.2-percent growth. Agriculture production has remained stagnant for so long. The sector’s failure to raise domestic production of rice, meat and fish is greatly causing a spike in inflation, which in July accelerated to a more than five-year high of 5.7 percent from 5.2 percent in June.
The mining sector, once a significant contributor to the GDP, has also lost its luster. Pernia cited that the closure of several mining pits and the excise tax on non-metallic and metallic minerals led to the sector’s contraction of 10.9 percent.
The Philippines, despite the GDP letdown, remains one of the best-performing economies in Asia behind Vietnam’s 6.8 percent and China’s 6.7 percent in the same quarter. The economy can still regain its robust pace. But economic managers must see to it that the wheels of certain sectors are oiled Z to assure the smooth ride.