The government’s spending catch-up to make up for the delayed approval of this year’s national budget and easing inflation helped economic growth bounce back to a better-than-expected 6.2 percent during the third quarter, the fastest in one-and-a-half years.
“After two quarters of deceleration, the growth of the Philippine economy surged in the third quarter of 2019. This brings the year-to-date economic growth to 5.8 percent, just slightly below the lower end of the 6-7 percent full-year 2019 growth target of the government,” Socioeconomic Planning Secretary and the country’s chief economist Ernesto M. Pernia told a press conference Thursday.
“Compared with other major emerging market economies in the region that have already released their third-quarter GDP numbers, the Philippines likely ranked second behind Vietnam’s 7.3 percent but higher than China’s 6 percent, India’s expected third-quarter growth of below 6 percent, and Indonesia’s 5 percent for the period,” added Pernia, who heads the state planning agency National Economic and Development Authority (Neda).
Third-quarter GDP growth was the highest quarterly figure since the 6.8 percent posted during the first quarter of 2018.
Gross domestic product (GDP) growth averaged a dismal 5.5 percent in the first half due to government underspending on public goods and services at the start of the year because of the late budget approval. The government underspent P1 billion a day between January and April as it operated using reenacted 2018 appropriations after Congress failed to pass the budget on time due to squabbles over alleged “pork” funds.
National Statistician Claire Dennis S. Mapa said that on the expenditure side, public spending reflected by government final consumption expenditure rose 9.6 percent year-on-year in the third quarter.
For Pernia, the stronger growth in public spending in the third quarter contributed significantly to the growth performance.
Pernia said the big-ticket infrastructure projects of the Departments of Public Works and Highways (DPWH) and of Transportation (DOTr) mostly contributed to higher government spending in the third quarter.
Meanwhile, Mapa said consumer spending reflected by household final consumption expenditures rose 5.9 percent during the same period.
For the remaining months of the year, the benign inflation outlook, and more upbeat consumer confidence are expected to stimulate private consumption, especially with the nearing holiday season that has begun, Pernia said.
The services sector grew 6.9 percent year-on-year during the July-to-September period; industry, 5.6 percent, and agriculture, 3.1 percent, according to Mapa.
In terms of contribution to third-quarter GDP growth, services contributed the bulk or 4.1 percentage points; industry, 1.9 percentage points, and agriculture, 0.2 percentage point, Mapa said.
To achieve the full-year growth goal, Pernia noted that the economy needed to grow by at least 6.7 percent during the fourth quarter—“a challenge that we are confidently taking on.”
In a statement, Finance Secretary Carlos G. Dominguez III welcomed the rebound in third-quarter GDP growth en route to hitting at least the lower end of the government’s growth target.