Philippine economy shows strength as demand holds
MANILA: The Philippine economy grew faster than expected in the third quarter (3Q), boosting the case for the central bank to tighten monetary policy further to contain inflation amid a sustained demand recovery.
Gross domestic product (GDP) rose 7.6% in the three months through September from a year ago, the Philippine Statistics Authority reported yesterday, compared to a revised 7.5% in the second quarter.
That’s also faster than the 6.2% median estimate in a Bloomberg survey.
Output grew 2.9% last quarter from the April to June period, despite inflation in the July-september period far exceeding the central bank’s 2% to 4% target.
Consumer spending during the period rose 8% from a year ago, supported by a strong demand recovery.
The latest GDP paints a better picture of the economy even as the central bank presses ahead with the most-aggressive policy tightening in two decades to cool price gains.
Central bank governor Felipe Medalla had flagged he will match on Nov 17 the Federal Reserve’s 75-basis-point rate hike, and signalled openness to continue moving in lockstep with the US monetary authority to defend the peso.
The GDP performance largely benefited from the economy’s reopening, Economic Planning Secretary Arsenio Balisacan told reporters in Manila.
He said the nation is on track to achieve its 2022 growth target of 6.5% to 7.5%.
“The Philippines’ stronger-than-expected pickup in 3Q keeps the pressure on Bangko Sentral ng Pilipinas to continue raising interest rates next month and likely into next year,” said economist Tamara Mast Henderson.
The Philippines remains among Asia’s bright spots, as rising borrowing costs and a cost-of-living crisis dim the global economic outlook.