Economy up 6% in Q3, still 1 of Asia’s fastest
The Philippine economy grew at its fastest pace so far this year in the third quarter, as total economic output expanded 6 percent on the back of sustained robust consumer spending, and improved government expenditures on public goods and services.
The expansion of the gross domestic product (GDP) in July-September was exceeded only by China’s 6.9 percent and Vietnam’s 6.8 percent, making the Philippines “one of the fastest-growing major Asian economies,” Socioeconomic Planning Secretary Arsenio M. Balisacan said on Thursday.
The Liberal Party standard-bearer, Mar Roxas, said the economic surge under the Aquino administration was no fluke as it invested in infrastructure and human resources.
But the growth was slower than expected, as risks from a leadership change next year and the El Niño dry spell loomed.
GDP growth in the July to September period was faster than the 5.8 percent in the previous quarter but below the 6.3-percent median expectation of economists in a Bloomberg News poll, as a slowdown in manufacturing weighed on growth in services and public spending.
The El Niño dry spell, projected to peak in December and January, has begun to hurt agriculture, which was down 1.1 percent quarter-on-quarter, data showed.
Balisacan said this was due to inadequate irrigation of farmlands but the government was addressing the problem.
The services sector was the main growth driver in the third quarter, growing 7.3 percent—the highest in two years—from 5.6 percent last year.
Industry slows, agri declines
Year-on-year, industry growth slowed to 5.4 percent from 7.8 percent, while agriculture declined 0.4 percent from a 2.6-percent contraction.
The local and foreign business community yesterday called on the government to put more focus on developing the lagging agriculture sector.
Henry J. Schumacher, vice president for external affairs at the European Chamber of Commerce of the Philippines, said in a text message that while the overall growth of 6 percent in the third quarter was good, “the focus has to be on the zero growth in agriculture.”
“As inclusive growth is needed, the agribusiness sector needs to be pushed,” Schumacher said.
Francisco F. del Rosario Jr., president of the Management Association of the Philippines (MAP), said “agricultural productivity should also be a concern” if the government wanted to further boost GDP growth in the last quarter.
At a press briefing, Balisacan said “[t]he 6-percent growth in the Philippines’ real gross domestic product in the third quarter of this year is certainly an encouraging sign of a steadily growing economy.’’
Private consumption was a major growth driver. “With availability of more jobs, increasing employment and income, low inflation and inflow of overseas Filipino remittances, household consumption also grew by 6.3 percent,’’ Balisacan said.
He said Filipino households increased their spending mostly on food and non-alcoholic beverages, miscellaneous goods and services, transport, restaurants and hotels, and communication.
“Strong domestic demand fueled output growth, led by significant improvements in government spending and household consumption,’’ he said.
State spending up
Balisacan noted that the quarter also saw public sector performance improving, with government final consumption expenditure increasing from 3.9 percent to 17.4 percent.
Budget Secretary Florencio Abad said government spending year-on-year growth as of September was the biggest quarterly growth since 2012.
“This means our efforts to address institutional weaknesses that hamper the agencies from spending public funds and delivering services quickly and with measurable impact are working,’’ Abad said in a statement.
He said he was optimistic that the spending momentum would be sustained until the end of the year “as disbursements accelerate toward the latter part of the year when agencies rush the completion of projects.”
“Developments such as this show clearly that good governance is indeed good economics, and that reforms pave the way toward a more business-and investment-friendly environment,” said presidential spokesperson Edwin Lacierda.
Full year target
Balisacan said growth in the first nine months of the year was 5.6 percent, making a 6-percent full-year growth likely given even better prospects for the last quarter.
The government’s official GDP growth target for 2015 is 7-8 percent, but economic managers has already conceded that the economy could expand this year at a “realistic” range of only 6-6.5 percent.
The economy should grow by at least 6.9 percent in the fourth quarter to reach the lower end of the “realistic” growth figure.
Balisacan said the economy could expand by as much as 7 percent or more in the October to December period.
“This growth trajectory we are seeing will likely to continue in the fourth quarter as we expect domestic demand to still pick up during the holiday season. This, along with low inflation, low oil prices, and the anticipated effects of election spending on the country’s growth, supports this outlook. Moreover, the services sector will remain strong and investments are likely to go up due to the expected increase in disbursements,” he said.
However, Balisacan admitted that challenges to achieving 6-percent growth in 2015 remained. “One is the still lingering effects of El Niño on the economy, especially for agriculture. The government has been taking measures to mitigate the impact particularly on food security and potable water supply,” he said.
“Another risk would be the uncertainties that are naturally brought by an impending change of leadership, with next year’s national elections. We need to remain focused on ensuring that the economy is on the right path as political changes take place,” he added.
But he said next year’s elections would impact both positively and negatively on economic growth moving forward, as election spending mainly by candidates would bolster private consumption, while the uncertainty to be brought by a change in leadership, especially the top post in the land, may put investors on wait-and-see.
To further ensure a faster growth for 2015, MAP president Del Rosario said the Aquino administration must prioritize measures and programs aimed at attracting more foreign direct investments to create more employment; ensuring inclusive growth; implementing tax reforms; pursuing critical infrastructure projects; removing negative investment provisions in the Constitution; and eliminating corruption.
John D. Forbes, senior adviser at the American Chamber of Commerce of the Philippines, also pointed out that growth should be higher to be more inclusive.
Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation, remained bullish that the local economy would post a faster growth in the last three months, citing increased government spending, a more robust domestic consumption and election spending. With reports from Jerry E. Esplanada, Gil C. Cabacungan and AFP
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