President Ferdinand Marcos Jr. acknowledged that the Philippines’ economic expansion during the second quarter was “very disappointing” after gross domestic product growth slowed to 2.3 percent, registering the weakest quarterly performance since the pandemic.
Speaking at a luncheon hosted by the Foreign Correspondents Association of the Philippines (FOCAP), the President defended his administration’s underlying policy framework, attributing the deceleration to global energy disruptions and delayed government disbursements.
”The growth rate is, of course, very disappointing,” Marcos Jr. told reporters.
”But if we look at the basic policies that we have undertaken and that we have made, the policy decisions that we have made, that they were effective until this energy crisis arose,” he said, noting that “the numbers are still reasonable.”
Marcos explained that public expenditure was delayed after the government instituted strict anti-corruption reviews and halted project biddings following a major infrastructure scandal that compromised the previous year’s budget.
”Growth rate is dependent – is heavily dependent on public spending, and that has been delayed,” he said.
”With what happened last year, where we had to re-examine the budget very, very closely, those projects, those contracts were not bidded out, and they were bidded out towards the end of the first quarter of this year. That is what happened. That’s why it delayed the public spending,” he said.
He highlighted that public spending currently faces “only at a shortfall of about 7% year on year”.
”We will make that up for the rest of the year,” he said.
”I am confident we will be able to catch up and exceed the year-on-year public spending by the last quarter of this year, and the effects of that will show in terms of the growth rate,” he said.
In addition to delayed state spending, the President cited reduced household spending caused by global oil price fluctuations linked to ongoing conflict in the Middle East.
”That volatility erodes confidence, and that erosion in confidence means people do not spend their money because they don’t know what is going to happen next month or two months, three months from now,” he said.
”That is what we are having to deal with, and what we are trying to do with the economy is to bring stability back into our economic system so that people, households, business people can plan,” he said, pointing to expanded cash transfers and targeted fuel subsidies for vulnerable groups.
”We focus on those who were spending a large percentage of their income on precisely food and fuel,” he said.
Addressing the weakness of the local currency, Marcos attributed the Philippine peso’s depreciation primarily to the global strength of the United States dollar.
”As you know, the dollar is usually regarded as a safe harbor during times of uncertainty, and that’s why people have invested in, that’s why the foreign exchange for the dollars – the dollar value has increased vis-à-vis relative to many, many, in fact, most currencies around the world because of that,” he said.
”The peso, we are trying to defend the peso, but it’s not something that we are spending all our money on at all, by any means,” he said.
Looking ahead, Marcos expressed hope that supply bottlenecks along vital petroleum shipping lanes like the Strait of Hormuz will settle, enabling smoother economic forecasting.
”We hope that this is not a new normal, that it will be like this forevermore,” he said.
”We are hoping that the situation in the Strait of Hormuz improves. We hope that the situation in all of the waterways that are being used to transport petroleum products are stabilized so that we can now count on some assumptions that we can make so that we can plan on the national and economic development,” he said.
”So there are many, many moving parts here, many of them out of our control, but we are trying to be as agile as possible and to prepare in the longer term for the possibility of this happening again.”
Until global conditions normalize, Marcos stated that the government has moved to secure alternative international supply and trade agreements for food and energy needs.