6.1% Q3 GDP growth slowest in 3 yrs
Due to high prices, many consumers cut down on their purchases of food, among other essential items, hence tempering a major booster to the Philippine economy and slowing overall economic growth to a three-year low of 6.1 percent year-on-year in the third quarter.
“We are not exactly exuberant about the 6.1-percent growth rate, but comforted that we remain one of the fastest-growing economies in Asia, next to Vietnam at 7 percent, China at 6.5 percent, and way ahead of Indonesia at 5.2 percent,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a press conference yesterday.
The gross domestic product (GDP) expansion during the first nine months of the year was the slowest since the 6-percent growth posted in the third quarter of 2015.
Economic growth averaged 6.3 percent in January to September, below the downgraded full-year goal of 6.5-6.9 percent.
“With this, the Philippines needs to expand by at least 7 percent in the fourth quarter to attain the low end of the government’s target,” noted Pernia, who heads state planning agency National Economic and Development Authority (Neda).
As such, Pernia said achieving the 2018 growth target was “much more challenging.”
But Pernia said the government was more concerned “because the main reason for the slowdown was the decline in household consumption, particularly the marked slowdown in household spending on food and other basic products.”
Household consumption expenditure growth eased to 5.2 percent year-on-year in the third quarter, the slowest since the 5-percent rise posted in the third quarter of 2014.
In particular, Pernia said household spending on food slowed to 2.8 percent from 6.2 percent in the second quarter.
The Neda chief noted that while “food manufacturing was adversely affected by the output decline in the agricultural sector, the increase in the price of sugar and tin cans,” the larger factor was “the consequent slowdown in food demand by households.”
Pernia admitted that high inflation tempered consumer spending.
Had it not for the elevated rate of increase in prices of basic commodities, the economy would have grown by a faster 6.5-7 percent in the third quarter, Pernia said.
Headline inflation averaged 6.3 percent from July to September, above the government’s 2-4 percent target range.
The 6.7 percent inflation rate in the month of September was an over nine-year high partly due to food supply woes.
The government had already issued orders to ease rules on food importation and to boost supply.
“That is exactly why the government has swiftly moved to boost consumer confidence and tame inflation. With the measures we have been pushing for, the slowdown in household spending is deemed to be abatable and temporary. But we can only do so much. We need the support of many stakeholders here, especially the legislature,” Pernia said, urging Congress to pass the rice tariffication bill.
The proposed measure “will reduce rice prices by P2 to P7 per kilo and help enhance the productivity of farmers through the tariff revenue that will be given to them to improve their performance,” the Neda chief said.
“Even as domestic demand is expected to return to high gear in the fourth quarter due to the holiday season, we will continue addressing upward pressures on prices, especially on food,” according to Pernia.
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