The Philippine economy grew by 6.3% in the second quarter according to official data published on Thursday.

Government spending and investments helped counterbalance “anaemic” consumption growth, as inflation burdened households.

The expansion was the fastest since the 6.4% annual growth recorded in the first quarter of last year, surpassing the 6.2% forecast in a Reuters poll of economists and exceeding the upwardly revised 5.8% growth for the first three months of the year.  

In addition, consumer spending rose by 4.6% during the period, contributing two-thirds of the output. Investments grew by 11.5%, and government spending increased by 10.5%.

“The household final consumption expenditure continued to be a bit anaemic, the growth is not as strong as one would expect,” said Economic Planning Secretary Arsenio Balisacan.

He added that first-half GDP growth averaged 6.0%, positioning the economy well to achieve the full-year growth target of 6.0% to 7.0%, Reuters reports.

Moreover, on a seasonally adjusted basis, the economy grew by 0.5% quarter-on-quarter, slower than the previous quarter's 1.3% growth and below the 0.9% forecast in a Reuters poll.

The GDP data came after an inflation report on Tuesday, which revealed that consumer prices accelerated at their fastest rate in nine months in July. This led the central bank governor to suggest that a rate cut at the next meeting on 15th August would be “a little bit less likely.”

The 4.4% inflation rate, which surpassed market expectations, fell outside the central bank's target range of 2.0% to 4.0% for the year. This was up from the 3.7% annual inflation rate recorded in June.

The economy was also bolstered from a decline in the unemployment rate, which fell to 3.1% in June, the lowest level since December 2023, according to government data released on Wednesday.

However, agriculture, forestry, and fishing remained a weak spot in Q2, contracting by 2.3% year-on-year due to a prolonged dry spell brought on by the El Niño weather pattern.