MANILA, Aug 10 (Reuters) – The Philippine economy contracted for a third straight quarter in April-June last year, the statistics agency said on Thursday, dragged down by higher commodity prices and slower government and consumer spending.
Gross domestic product (GDP) rose 4.3% in the June quarter, losing further momentum after the previous quarter’s 6.4%, which was slower than the December quarter’s 7.1%.
On a quarterly basis, the economy shrank 0.9% in the second quarter, weaker than the 1.1% expansion in the March quarter and missing economists’ 0.5% growth forecast.
The country’s economy ministers attributed the weak performance to rising agricultural prices, which dampened consumer spending, and a contraction in government spending compared to the same period the year before the election.
„In the second quarter, moderate economic expansion was driven by an increase in tourism-related spending and business investment, but was offset by higher commodity prices, the lagged effects of interest rate hikes, contraction in government spending and slower global economic growth,” they said in a statement.
Lower-than-expected growth in the second quarter will weigh on the central bank’s policy review, which will meet on August 17 to decide whether to resume raising rates or suspend its rate hikes.
Ministers said the improving inflation outlook is favorable to easing interest rates, accelerating government spending in the coming quarters, and aiming to ensure overall price stability amid downside risks.
Report by Neil Jerome Morales and Enrico Dela Cruz; Editing by Martin Petty
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