Manila: The Philippine economy likely grew at a faster pace in the second quarter of the year, driven by election-related spending and easing inflation, an economist from the Bank of the Philippine Islands (BPI) said. In a commentary on Friday, BPI lead economist Jun Neri stated that the country's economic growth likely accelerated to 5.8 percent in the second quarter, surpassing the previous 5.4 percent gross domestic product (GDP) growth.

According to Philippines News Agency, Neri highlighted that household consumption remained the primary growth driver, supported by election-related spending, a reduction in inflation, particularly due to the sustained decline in rice prices, and continued strength in consumer lending. He added that stronger food exports might have been enhanced by favorable weather conditions, while foreign sales of electronics were recorded ahead of the implementation of higher US tariffs.

Neri cautioned, however, that these growth factors could be partially offset by slower government spending and infrastructure expenditures resulting from the election spending ban. On the production side, he noted that softer electricity sales likely contributed to a more subdued pace of industrial and commercial activity, which posed a mild drag on overall growth momentum.

Despite these challenges, Neri expressed optimism that achieving the government's revised growth target of 5.5 percent to 6.5 percent remains feasible, particularly if the second-quarter results exceed expectations. BPI anticipates the country's economic growth to reach 5.8 percent this year.

Nonetheless, Neri acknowledged the potential for a downward revision if recent typhoons cause delays and damage to production and infrastructure, impacting overall performance. He also pointed out that downside risks from higher US tariffs may need to be considered if more changes are announced later this year.