Philippine economic growth likely slowed down in the third quarter, largely due to the smaller increase in public spending during the period and weaker household spending.
An Inquirer poll of nine economists conducted last week yielded a median gross domestic product (GDP) growth estimate of 5.9 percent for the third quarter.
If realized, this would be slower than the preliminary 6.3-percent growth recorded in the previous quarter and the 6-percent expansion logged in the same period last year.
This would bring the average GDP growth for the first three quarters to 6 percent, which is at the lower-end of the government’s target of 6 to 7 percent for the year.
The Philippine Statistics Authority is set to release third quarter GDP data on Nov. 7.
“We expect growth in the [third quarter] to have cooled to 5.7 percent year-on-year as public spending, both in consumption and investment, moderated,” said HSBC economist Aris Dacanay.
Government spending in the third quarter was estimated to have eased to 6.4 percent from the prior quarter’s 10.7 percent.
But even if growth slowed, the number is still a “solid” 5.7 percent, which Dacanay believes will boost the Bangko Sentral ng Pilipinas’ (BSP) confidence to further lower interest rates.
On Oct. 16., the BSP cut the benchmark rate—which banks typically use as a guide when charging interest on loans—by a quarter point to 6 percent.
Restrictive policy
“Currently at 6 percent, monetary policy remains restrictive as seen in credit growth and vehicle purchases being relatively flat,” he added.
Meanwhile, ANZ Research pegged GDP growth in the third quarter at 5.7 percent, also citing weaker private consumption, which is the main driver of Philippine economic activity.
Government data show that household spending increased by just 4.6 percent in the last quarter, decelerating from 5.5 percent in the same period last year.
This marks the weakest growth since the pandemic began. INQ