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The Philippine economy grew 5.9% in the third quarter, outpacing that of other major emerging economies in Asia
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This brings average GDP growth for the first three quarters at 5.5%
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The economy will have to grow 7.2% in the fourth quarter to meet the low end of the government’s 2023 target of 6% to 7%
The Philippine economy expanded 5.9% year-on-year in the third quarter, faster than the previous quarter’s 4.3% growth, according to the Philippine Statistics Authority.
For the first three quarters, the average gross domestic product growth rate was at 5.5%. The economy needs to advance by 7.2% in the fourth quarter to reach the low end of the government’s target of 6% to 7% for the entire year.
The Philippines outpaced growth of other major emerging economies in Asia in the third quarter, including Vietnam, 5.3%; Indonesia and China, 4.9%; and Malaysia, 3.3%.
Growth was widespread across all major sectors, with agriculture expanding at 0.9%, industry at 5.5%, and services at 6.8%. Key contributors to growth were wholesale and retail trade, repair of vehicles and motorcycles at 5%; financial and insurance activities at 9.5%; and construction at 14%.
From the demand side of the economy, domestic demand improved to 3.9% in the third quarter from 2.2% in the previous quarter. External demand or net exports rose by 12.9% from 8.5% in the second quarter.
Household consumption growth slowed to 5% in the third quarter from 5.5% in the previous quarter due to an increase in food inflation of from 7.4% to 8.2%.
Gross capital formation declined by 1.6% year-on-year, mainly due to a substantial drawdown in inventories and a slowdown in durable equipment. However, public construction grew by 26.9%, and private construction saw a 5.1% growth.
National Economic and Development Authority director general Arsenio Balisacan in a statement said catch-up expenditure plans addressed contraction in government spending in the previous quarter. Government final consumption expenditure and government fixed capital formation showed significant growth in the third quarter, contributing 2.1 percentage points or 36% to the GDP growth. This is a positive shift from negative growth in the second quarter.
Even as inflation has eased to 4.9% in October 2023 from 6.1% in September 2023, Balisacan said the government will continue to prioritize strategies in response to potential impacts of El Niño, projected to intensify in the coming months until early 2024.
“The government will provide much-needed support for agricultural production in the provinces that will still be able to grow food during the worst of El Niño. Additionally, the government will provide emergency employment opportunities for farmers in provinces who cannot produce during this period,” he said.
“Moving forward, we will continue to leverage the full implementation of liberalization reforms to intensify investment promotion in the country and boost growth, thereby generating higher-quality employment opportunities for our growing labor force. We thank Congress for passing the consolidated version of the Public-Private Partnership Act. Once signed into law by the President, which we expect to happen within the year, this legislation will promote greater private sector participation in the country’s infrastructure development.”
