High Inflation, Interest Rates Slow Down Economic Growth in Q2 2023

Despite high inflation and interest rates, the country’s major industries, imports, and exports experienced growth from April to June.

The Philippine Statistics Authority (PSA) has revealed that the country’s gross domestic product (GDP) grew by 4.3% from April to June this year. However, this growth is considered slower in comparison to the 6.4% growth that took place during the first three months of 2023.

What’s more, the slow growth has been attributed to high commodity prices—as well as the effects of increases in interest rates.

The country’s growth target for 2023 is 6% to 7%. According to a report, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said that, in order for this to happen, GDP should expand by 6.6% during the second half of 2023. “Notwithstanding the challenges, we believe this is still attainable,” says the NEDA secretary. 

Top Contributors to Q2 2023 Growth

According to the data presented by the PSA, the country’s major industries experienced growth in the second quarter of 2023. The numbers are as follows:

  • Agriculture, Forestry, and Fishing: 0.2%
  • Industry: 2.1%
  • Services: 6%

Leading the top contributors to the GDP growth in Q2 2023 is transportation and storage, which contributed by 17.3%. Wholesale and retail trade, repair of motor vehicles and motorcycles contributed 5.3%, while financial and insurance activities contributed 5%. 

The second quarter also saw an increase in household consumption, which grew by 5.5%, as well as imports and exports. Imports grew by 0.4% while exports recorded better numbers at 4.1%

What Spurred Growth in Q2 2023?

According to Secretary Balisacan, the increase in tourism-related spending as well as commercial investments spurred the growth experienced in the second quarter. Entrepreneurs can consider these as business opportunities that can be explored in order to further grow the economy. 

Tourism, in particular, has been a very hot topic in 2023, especially as people continue to revenge travel to make up for the years spent social distancing due to the pandemic. With travel making a comeback, related business opportunities are worth exploring for interested entrepreneurs. 

These include health and wellness tourism, which is projected to rise this year, and even hospitality tech.