Philippines' Q3 economic growth at 6-6.5% sans high inflation - economist

The Philippine economy’s growth rate in the third quarter could have been higher if not for the elevated inflation, which dampened consumer spending—a main driver of economic growth, according to an economist.

“Kung hindi lang problema ang inflation noong third quarter, nasa 6% to 6.5% tayo,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said at the Saturday News Forum in Quezon City.

(If inflation was not a problem in the third quarter, the growth rate could have been at 6% to 6.5%.)

During the July–September period, inflation—or the rate of increase in the prices of consumer goods and services—averaged 5.36%.

In July, inflation clocked in at 4.7%, then accelerated to 5.3% in August, and further quickened to 6.1% in September.

While the overall gross domestic product (GDP) growth rate of 5.9% in the third quarter was an improvement from the 4.3% seen in the second quarter, consumer spending—which accounts for the lion’s share of the economy—saw a decline.

In particular, household final consumption expenditure (HFCE) grew slower at 5%, from 5.4% in the second quarter and 8% in the same quarter last year, blamed on elevated inflation and high interest rates, which dampened spending during the period.

Food inflation in the third quarter was 8.2%, faster than the 7.4% rate in the second quarter of the year.

Rice was the main culprit for the high inflation, as it climbed to a 14-year high of 17.9% in September due to supply issues and alleged hoarding by unscrupulous traders.

The third quarter, particularly in August, also saw a series of hikes in fuel pump prices amid the tightening of supply by top oil producers Saudi Arabia and Russia.

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

With this, 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.

Ricafort said the target is still achievable as he expects Christmas-related spending and an influx of overseas remittances to prop up economic activity in the last quarter of the year. —VBL, GMA Integrated News