Philippine economy grows faster at 5.9% in Q3

The Philippine economy regained its footing in the third quarter of 2023, following a slowdown seen in the previous quarter, the Philippine Statistics Authority (PSA) reported on Thursday.

The economy, as measured by gross domestic product  (GDP) or the total value of goods and services produced in a period, grew by 5.9% during the July to September 2023 period, PSA chief and National Statistician Claire Dennis Mapa said at a press conference.

This is faster than the 4.3% growth rate seen in the second quarter of the year —its slowest pace in nine quarters since the country entered the positive territory in the middle of 2021 following a pandemic-induced recession. 

“We are pleased to announce that the Philippine economy continues to grow despite several major headwinds that we have experienced and continue to experience,” National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said.

“This performance makes our economy the fastest among the major emerging economies in Asia that have released their third-quarter 2023 GDP growth: Vietnam at 5.3%, Indonesia and China at 4.9%, and Malaysia at 3.3%,” the NEDA chief said.

The third quarter economic performance brought the year-to-date or the January to September 2023 GDP growth rate to 5.5%.

With this, Balisacan said the economy needs to grow by 7.2% in the last quarter of 2023 to hit at least the low end of the Marcos administration’s target of a 6-7% GDP growth rate for the entire year. 

The country’s chief economist expressed optimism that the full-year target is “still doable” and “within reach” amid the seasonal increase in economic activity during the Christmas season.

The NEDA chief said that sustaining the inflation downtrend seen in October is the key to boosting the economy.

“I see the decline in inflation to continue,” Balisacan said.

“So the focus is ensuring that reduction, decreasing inflation for October 2023 will be sustained in the coming months,” he said.

Inflation or the rate of increase in the prices of goods and services slowed down in October as it clocked in at 4.9%, down from 6.1% in September.

Main contributors

Mapa said the three main contributors to the third quarter growth were wholesale and retail trade, repair of motor vehicles and motorcycles, financial and insurance activities, and construction, which contributed 1.1 percentage points, 1 percentage point, and 0.9 percentage point to the growth rate, respectively.

Wholesale and retail trade, repair of motor vehicles and motorcycles, financial and insurance activities, and construction posted year-on-year growth rates of 5%, 9.5%, and 14%, respectively.

Meanwhile, the country’s major economic sectors all posted year-on-year positive growths.

Agriculture, forestry, and fishing; industry; and services sectors posted 0.9%, 5.5%, and 6.8% growth rates, respectively.

Quarter-on-quarter, services sector saw the fastest growth at 3.8%, followed by industry at 2.9%, and agriculture at 1.4%.

Inflation dampens spending

On the demand side, however, household final consumption expenditure (HFCE) grew slower at 5%, from 5.4% in the second quarter and 8% in the same quarter last year as elevated inflation and high interest rates dampened spending during the period.

Balisacan, in particular, cited the 8.2% food inflation in the third quarter from 7.4% in the second quarter of 2023.

The decline in household spending was offset by government final consumption expenditure (GFCE), which grew by 6.7% from a contraction of 7.1% in the previous quarter.

“Overall, government spending contributed 2.1 percentage points or 36 percent of the observed 5.9 percent GDP growth,” Balisacan said.

“We commend the national government agencies and local government units for responding to the economic team's call to implement catch-up expenditure plans. These plans aim to expedite the implementation of government programs and projects and improve the delivery of public services under the 2023 public expenditure program. These actions addressed the contraction in government spending in the previous quarter. We hope to maintain this momentum for the remainder of the year and the years to come,” the NEDA chief said.

Moving forward, Balisacan said the government 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,” the NEDA chief said. —VAL, GMA Integrated News