Gross domestic product growth accelerated to 6.2 percent in the third quarter, putting the economy on track to achieve the low end of the government’s 2019 growth target range of 6 percent to 7 percent.
Data from the Philippine Statistics Authority showed the third-quarter growth was faster than 5.5 percent registered in the second quarter and 6 percent a year ago.
This brought the average economic growth in the first three quarters to 5.8 percent, near the low end of the target range.
“After two quarters of deceleration, the growth of the Philippine economy surged to 6.2 percent in the third quarter of 2019,” National Economic and Development Authority director-general and Economic Planning Secretary Ernesto Pernia said in a news briefing Thursday.
“The stronger growth in public spending in the third quarter contributed significantly to our third-quarter performance. Some may be quick to say that the private sector is a timid participant in our economic growth. Nothing can be farther from the truth,” Pernia said.
“We know that the private sector is the main driver of the economy, with the government providing an enabling policy environment and infrastructure. That is why we need to address infrastructure, logistics and regulatory bottlenecks,” he said.
Major contributors to the growth in the July-to-September period were services which grew by 6.9 percent, followed by the industry sector’s 5.6 percent and the agriculture sector’s 3.1 percent.
Construction had the highest growth in the period with 16.3 percent, followed by financial intermediation with 10.9 percent, transport with 9.1 percent and trade and repair of motorcycles and other vehicles with 8.1 percent.
Pernia said achieving the full-year growth target was still possible. “This means that the Philippine economy will have to expand by at least 6.7 percent in the last quarter of the year to meet the low end of the full-year target of 6 percent to 7 percent for 2019—a challenge that we are confidently taking on,” he said.
“That is very achievable. We have seen the economy surging and the momentum will continue,” he said.
Finance Secretary Carlos Dominguez III also expressed optimism that the full-year economic expansion would hit the lower band of the official growth forecast.
“The government has managed to hit its spending targets in the latter part of the July-September period, canceling out the residual effects of the nearly five-month delay in the 2019 GAA [General Appropriations Act] that spilled over into the second quarter, and keeping the Philippines among the world’s fastest economies amid the current global economic slump,” Dominguez said in a statement after the release of the third-quarter data.
Pernia said the Philippines emerged as the second-faster growing major economy in Asia, next only to Vietnam’s 7.3-percent growth in the third quarter. The Philippines outperformed China’s 6 percent, India’s expected growth of below 6 percent and Indonesia’s 5 percent in the same period.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the third-quarter growth showed that the government’s “catch-up plan is working.”
“The 6-percent full-year GDP growth target is a tall order, after a slower-than-expected first half, but still doable. In any event, the Philippines growth performance this year is one of the fastest among
relatively large economies, amidst a slowing global economy,” Diokno said.
ING Bank Manila senior economist Nicholas Antonio Mapa said with the 6.2-percent growth print in the third quarter, the Philippines would continue to chase the full-year growth of 6 percent to keep the string of strong growth alive.
“Household consumption may continue to deliver given that inflation even in the fourth quarter remains largely benign. Meanwhile, if recent trends shown in third-quarter data foretell the pace of
spending in the fourth quarter, government expenditure on both operating and maintenance as well as public construction to surge to close out the year,” Mapa said.
“In order to complete the growth picture however, the Philippines will need to see a positive contribution from the investment picture, which has languished in contraction for two straight quarters. Monetary easing and improving investor sentiment will likely lift capital formation to close out the year with an accelerated pace of capital formation growth expected in 2020 as recent Bangko Sentral ng Pilipinas rate cuts feed into the economy,” Mapa said.