MANILA (Aug 9): The Philippine economy expanded less than expected in the second quarter of 2022 (2Q22), but at a pace still in line with the official 2022 growth target, giving the central bank leeway to further tighten monetary policy to curb red-hot inflation.

The Southeast Asian country's gross domestic product (GDP) was 7.4% higher in 2Q22 than a year earlier, growing more slowly than the downwardly revised 8.2% annual rate seen in the previous quarter, and the median 8.6% forecast in a Reuters poll.

It was the slowest growth in three quarters, but the second-fastest so far in Asia in 2Q22, Economic Planning Secretary Arsenio Balisacan said.

The Bangko Sentral ng Pilipinas has flagged the possibility of raising key interest rates further by 50 basis points in its Aug 18 policy meeting, confident the economy can withstand a less accommodative policy.

It has raised interest rates by a total 125 basis points since the start of the year to tame inflation, which soared to its fastest pace in nearly four years in July.

Balisacan attributed the 2Q growth rate to strong construction and household consumption, among other factors.

He said the country's economic recovery remained strong, with the 2Q performance in line with this year's growth target for full-year GDP of 6.5% to 7.5%.

The administration of President Ferdinand Marcos, whose six-year term began on June 30, is further targeting growth in full-year GDP of 6.5% to 8% annually from 2023 to 2028.

Marcos, who is the concurrent agriculture secretary, has vowed to turn the long-neglected farm sector into an engine of growth, and to focus on fiscal management and infrastructure upgrades to sustain the economy's rebound from the Covid-19 pandemic.