MANILA - After much criticism that the government's P330-billion economic resiliency plan (ERP) was not working, official data showed on Thursday that it was to be thanked for fending off a recession in the second quarter.

According to the National Statistical Coordination Board (NSCB), the Philippine economy, as measured by gross domestic product (GDP), grew 1.5% in the three months to June, lower than the 4.2% growth recorded in the same period last year but an improvement on the revised 0.6% seen in the first quarter.

The agency said increased government spending on construction, owing to the frontloading of infrastructure projects under the ERP, helped the Philippine economy escape recession.

"The (ERP) resuscitated the domestic economy in the second quarter. It boosted government consumption growth to 9.1% from 0% in (the same quarter) in 2008," NSCB Secretary-General Romulo Virola said in a news conference, adding that other key growth drivers were trade, mining and quarrying, and private and government services.

The effectiveness of the stimulus plan has emerged as one of the most pressing concerns facing the Arroyo administration after the economy barely grew in the first three months.

President Arroyo's own economic adviser, Albay Gov. Joey Salceda, had said that the plan was "highly overstated" and might not be implemented well.

He said a big chunk of the P330 billion plan would just be coming from the usual yearly increment in the budget, while another chunk was supposed to go to infrastructure projects, which normally take too long to implement and so were unlikely to boost employment and the economy.

Stimulus spending crucial

Virola said recession, judged as two consecutive quarters of negative GDP growth, seems out of the picture "at least until the third quarter of the year."

Noting that the 1.5% growth last quarter was still modest, the NSCB chief emphasized how crucial government spending is in sustaining the country's recent economic performance.

"The government has to continue putting in money into the system," he told reporters.

To do this, however, Finance Secretary Margarito Teves said the government needs additional revenue-generating measures.

"We would like to reiterate our appeal to our colleagues in Congress to support our proposed revenue-enhancement bills," he said.

"Our efforts to improve revenue collection will help increase our capability to further boost spending for quality projects," he added.

National Economic and Development Authority policy planning head Dennis Arroyo believes the Philippines will surpass its annual growth target of 0.8 to 1.8% this year, with expected election-related spending fueling higher consumption.

"It's easy to breach," Arroyo replied when asked if the goal was achievable.

"To breach the 1.8%, you have to grow 2.6% in the next semester, which seems easy," he added.

Next year, Arroyo said the Philippines will also likely exceed its growth target of 2.6 to 3.6%.

"[It will be] higher than forecast. Recession globally is ending faster than expected."

Central bank policy

The Bangko Sentral ng Pilipinas (BSP), meanwhile, said that stronger-than-expected growth during the second quarter showed that its decision to end an interest rate easing cycle was correct and could set the stage for a shift in monetary policy.

"This clearly shows stronger signs of economic recovery," central bank deputy governor Diwa Guinigundo said.

"The recent decision to pause was correct, from which perspective, a possible shift in monetary policy may be decided," he added.

The BSP earlier wondered why the economy skidded to a halt in the first quarter despite the series of rate cuts it implemented to boost credit and encourage investments. It then urged that government spending be scrutinized to check whether funds are spent as programmed. With a report from Reuters