PH economy grows 5.9% in Q3

The country’s economy surged in the third-quarter on the back of higher consumer spending, the Philippine Statistics Authority (PSA) reported on Thursday, Nov. 9.

The economy, as measured by the gross domestic product (GDP), grew by 5.9 percent in July to September this year, stronger compared to the 4.3 percent growth recorded in the previous quarter.

However, the third-quarter pace is slower compared to the 7.7 percent growth recorded in the same period last year.

In a briefing on Thursday, Nov. 9, PSA Undersecretary Claire Dennis M. Mapa said major contributors to the growth were wholesale and retail trade, repair of motor vehicles and motorcycles, financial and insurance activities, and construction.

All major economic sectors also grew from July to September: agriculture grew by 0.9 percent, industry by 5.5 percent, and services by 6.8 percent.

On the demand side, government spending also accelerated by 6.7 percent, but gross capital formation shrunk by 1.6 percent.

Further, exports grew by 2.6 percent, while imports contracted by 1.3 percent, while household consumption slowed down to 5 percent, compared to 6.4 percent and 5.5 percent recorded in the first quarter and second quarter, respectively.

National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said the economic growth should reach 7.3 percent by the last quarter to attain the lowest target growth level this year.

The average economic growth rate for the first nine months of the year stood at 5.5 percent, which fell below the lower end of the targeted range of six percent to seven percent.

“It (growth target) is still doable, still within reach but of course the challenges are there particularly the continued external factors, the threats that come from these new political tensions, and of course the domestic inflation we’re facing,” Balisacan said.

The NEDA chief also added that the easing of inflation in October must be sustained to achieve the target.

Inflation rate in October slowed down to 4.9 percent, down from the 6.1 percent recorded last September.

However, Gareth Leather, Capital Economics senior Asia economist, said the economic growth in the third quitter would not be sustained due to high interest rates and weaker global growth.

Interest rates were raised by a cumulative 450 basis points this cycle which will likely to remain elevated, he added.

He also said that private consumption is expected to struggle in the near term which jumped by 4.8 percent from the 3.7 percent decline in the second-quarter.

“Elsewhere, the sharp increase in services exports also supported growth in Q3. However, we expect this strength to fade as well if, as we expect, global growth slows in the near term on the back of weakness in advanced economies,” the economist further said.

The forecast for the economic growth in 2023 has been revised to 5 percent from 4 percent due to stronger expected outturn for the quarter ending September, Leather said.

“However, our forecast for 2024 for 5.0 percent GDP growth remains unchanged. With the drag from higher interest rates yet to filter through the economy in its entirety and global demand likely to weaken, we expect below trend and below consensus growth in the coming quarters,” he further said.

— Xander Dave Ceballos