The Philippine economy is faring well despite a blip in the first and second quarters of the year when the reenacted budget and the run-up to the May elections restricted government spending.
It remains one of the fastest-growing in Asia and has weathered the turbulence in the global financial markets caused by the tit for tat between the US and China.
The gross domestic product grew 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. The pace of expansion brought the average economic growth in the first three quarters to 5.8 percent, or near the low end of the target range.
A catch-up spending plan in the third quarter put the economy back on the growth track. Major contributors to the growth in the July-to-September period were services which expanded 6.9 percent, followed by the industry sector’s 5.6 percent and agriculture’s 3.1 percent.
Construction, according to figures provided by the Philippine Statistics Authority, had the highest growth in the period at 16.3 percent, followed by financial intermediation at 10.9 percent, transport at 9.1 percent and trade and repair of motorcycles and other vehicles at 8.1 percent.
The Philippines emerged as the second-fastest 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.
The reduced inflation rate, mainly attributed to lower rice prices, has also restored the confidence of consumers, who are spending more. Bigger consumer spending raises demand and, in turn, prompts factories and service providers to increase their output.
The spending catch-up plan, however, provided the impetus for the more robust growth. Finance Secretary Carlos Dominguez III conceded that the accelerated spending in the latter part of the July-September period canceled out the residual effects of the nearly five-month delay in the approval of the 2019 budget that spilled over into the second quarter. Increased spending, he said, kept the Philippines among the world’s fastest economies amid the current global economic slump.
Lawmakers, meanwhile, should realize now the importance of approving the annual budget early. A delay will make a dent on the economic growth, lessen job opportunities and and worsen the poverty incidence.