Philippines economy expanded during the second quarter at a faster pace after the government increased stimulus spending to revive the economy. Monetary policy makers also had a great role in the recovery process as the nation's benchmark was cut to a low record to spur demand and support economic growth.

Philippines yearly gross domestic product grew 1.5% in the second quarter compared with a prior revised 0.6% from 0.4%, and the reading came better than forecasts that referred to 0.5%. Philippines economy expanded 2.4% on quarterly basis compared with a prior contraction by 2.3% that was revised to 2.1%, while the reading topped analyst forecasts that referred to 1.5%.

However, economic expansion was backed by the government's stimulus package that led to a widening budget deficit, but it was necessary to revive the economy after it grew 0.4% in the first quarter which is the slowest pace in a decade. Worth mentioning that the government allocated 330 billion peso that focused on providing more job opportunities and boosting domestic demand.

The Central Bank of Philippines began responding to the credit crisis since December last year. Monetary policy makers cut interest rates by 2% between December and July to reach the low record of 4.0% that helped the economic growth to accelerate in the second quarter.

Deteriorations in the exports sector eased as shipments fell 24.7% in June from a year earlier which is the least decline in seven months compared with a prior decline by 27.0%. The nation's exports sector began to show improvements along with stabilizing world demand, also increasing demand from China that is leading recovery in the Asian region helped exports in Philippines to rise.

The economy is facing the challenge of widening budget deficit after government spending increased. Philippine's Budget deficit reached $34.6 billion in July compared with a previous deficit of $30.2 billion in June. On the other hand, tax revenue declined as company's profits tumbled affected by the world recession.

Finally, Philippines government expects that the second half will witness more improvements along with more signs of recovery appearing in the world economy, while the Economic Planning Secretary Augusto Santos predicted a positive growth rate for this year as the economy reached the bottom in the second quarter from where it will start rebounding.