In a significant development for the Philippine economy, the country's gross domestic product (GDP) experienced a notable expansion of 6.3% year-on-year during the second quarter, a surge largely attributed to the remarkable performance of the construction sector, as reported by the Philippine Statistics Authority (PSA) on Thursday.
This growth indicates a robust recovery following the economic setbacks caused by the pandemic. The construction industry emerged as a key player, showcasing an impressive growth rate of 16% year-on-year in the same quarter. Alongside this, the financial and insurance sector demonstrated resilience, growing by 8.2%.
Meanwhile, the wholesale and retail trade sector, which encompasses the repair of motor vehicles and motorcycles, recorded a growth of 5.8%, contributing positively to the overall economic landscape. When examining other vital sectors, the industrial segment displayed a solid increase of 7.7% year-on-year, while the services sector expanded by 6.8%, highlighting diverse avenues of growth within the economy.
However, it is worth noting that agriculture, forestry, and fishing faced challenges, posting a second-quarter year-on-year decline of 2.3%, as articulated by the PSA. On the demand side, the sector of household final consumption expenditure illustrated a healthy growth rate of 4.6% year-on-year, signaling a recovery in consumer spending.
Furthermore, government final consumption expenditures witnessed a remarkable rise of 10.7%, while gross capital formation surged by 11.5%, indicating an increased investment interest. In terms of trade, the exports of goods and services saw an incline of 4.2% during the second quarter, while imports rose slightly by 5.2%, according to PSA assessments.
These figures reflect a burgeoning engagement in international trade and a gradual return to pre-pandemic trading levels. Additionally, the Philippine gross national income (GNI) grew by 7.9% year-on-year, benefiting substantially from net primary income from abroad, which skyrocketed by 24.7% during this period.
This increase can be attributed, in part, to a substantial number of nationals employed overseas, who send remittances back home, bolstering the nation's positive net primary income position. The economic rebound indicates a return to pre-pandemic performance levels, highlighting a significant recovery trajectory.
Historically, prior to the onset of the pandemic in 2020-2021, the Philippine GDP exhibited a consistent expansion within the range of 5% to 7%. However, the landscape shifted dramatically during the pandemic, as the GDP faced a staggering decline of 16.9% in the second quarter of 2020, marking the quarter with the largest dip in economic activity. The economy began its upward journey again in 2021, showcasing resilience and adaptability. In related news, the Bangko Sentral ng Pilipinas (BSP), the nation's central bank, is scheduled to convene on August 15, where key policy decisions regarding monetary strategies will be explored amid ongoing economic recovery efforts. Furthermore, the Philippines recorded an inflation rate of 4.4% year-on-year in July, surpassing the central bank's target range of 2% to 4% annually.
In response to rising inflation concerns, the BSP has positioned its benchmark interest rates at 6.5%, approaching a 17-year high, as part of efforts to mitigate inflationary pressures in the economy..