Third-quar­ter GDP growth dis­ap­points

Business World - - Front Page - By Eli­jah Joseph C. Tubayan Re­porter

THE PHILIP­PINE ECON­OMY grew at its slow­est pace in three years last quar­ter, weighed down by tem­pered house­hold spend­ing amid high in­fla­tion and farm con­trac­tion, the Philip­pine Statis­tics Au­thor­ity (PSA) said on Thurs­day.

Gross do­mes­tic prod­uct (GDP) — the to­tal amount of fi­nal goods and ser­vices pro­duced within the coun­try’s borders — grew by 6.1% year-on-year in the July-Septem­ber pe­riod, slower than the re­vised 6.2% the pre­ced­ing three months and the 7.2% growth recorded in July-Septem­ber 2017, ac­cord­ing to data re­leased by the PSA yes­ter­day.

Third-quar­ter growth also com­pared to the 6.3% me­dian es­ti­mate in Busi­nessWorld’s poll of 15 an­a­lysts last week and was the slow­est pace since the sec­ond quar­ter of 2015 when it clocked six per­cent.

GDP growth av­er­aged 6.3% in the first three quar­ters, com­pared to 6.8% in the same pe­riod in 2017, and is be­low the gov­ern­ment’s down­ward-ad­justed 6.56.9% tar­get range for 2018.

So­cioe­co­nomic Plan­ning Sec­re­tary Ernesto M. Per­nia said in a brief­ing that the econ­omy needs to grow by at least seven per­cent this quar­ter to hit the floor of this year’s goal.

In­crease in gross na­tional in­come — the sum of the GDP and net in­come from abroad — picked up to six per­cent last quar­ter from April-June’s 5.9% but was still slower than the year-ago 7.3%.

Mr. Per­nia said that third-quar­ter growth was “re­spectable,” just be­low Viet­nam’s seven per­cent and China’s 6.5% but still faster than In­done­sia’s 5.2% for the same three months.

More­over, the Philip­pines’ sus­tain­ing at least six per­cent growth for the past 14 quar­ters “sug­gests that we are now on a higher growth tra­jec­tory,” he added.

Say­ing eco­nomic man­agers were “not ex­actly ex­u­ber­ant about the 6.1% growth rate,” Mr. Per­nia said: “We are con­cerned about third-quar­ter growth num­bers — not be­cause it fell be­low ex­pec­ta­tions… at 6.3%… not be­cause it makes the… growth tar­get for the year much more chal­leng­ing… Rather, we are con­cerned be­cause the rea­son for the slow­down — among oth­ers — is the slow­down in house­hold con­sump­tion, par­tic­u­larly the marked slow­down in the house­hold spend­ing on food and other ba­sic prod­ucts.”

Growth of house­hold fi­nal con­sump­tion ex­pen­di­ture clocked 5.2% last quar­ter com­pared to 5.4% a year ago and the sec­ond quar­ter’s 5.9%. Mr. Per­nia said he ex­pects house­hold de­mand “to re­turn to high gear this fourth quar­ter due to the hol­i­day sea­son”.

The third quar­ter’s GDP growth slow­down came at a time of el­e­vated in­fla­tion, which av­er­aged 6.6% in the same three months af­ter Septem­ber and Oc­to­ber’s nine-year-high 6.7% pace.

The gov­ern­ment has scram­bled to tem­per price in­creases es­pe­cially of food through non­tar­iff mea­sures de­signed to clear sup­ply bot­tle­necks.

It is also push­ing a shift from a decades-old im­port quota scheme for rice to one that opens im­por­ta­tion to all qual­i­fied pri­vate groups in or­der to slash re­tail prices by about P7 per kilo­gram and in­fla­tion rate by 0.7 per­cent­age points.

Fuel­ing growth on the de­mand side was gov­ern­ment spend­ing, whose growth ac­cel­er­ated to 14.3% in the third quar­ter from 8.3% the past year and 11.9% in the sec­ond quar­ter.

Cap­i­tal for­ma­tion surged 16.7% in the three months ended Septem­ber from 10.3% in the same pe­riod last year, but slumped from 21.5% in the AprilJune pe­riod.

In­crease in ex­ports of goods and ser­vices slowed to 14.3% from 18.8% a year ago, but was faster than 12.6% the pre­vi­ous quar­ter.

Im­ports on the other hand ex­panded by 18.9%, slightly slower than the 17.2% last year, but a tad faster than 18.5% in April-June.

Among sec­tors, ser­vices con­tin­ued to be the main driver of the econ­omy, ex­pand­ing by 6.9% in the third quar­ter, slower than 7.3% a year ago though up slightly from the sec­ond quar­ter’s 6.8% in the sec­ond quar­ter.

In­dus­try, how­ever, slowed down to 6.2% from 8.1% last year and 6.5% in the sec­ond quar­ter, as Mr. Per­nia said that it faced higher in­put costs. Man­u­fac­tur­ing re­mained the top con­trib­u­tor to in­dus­try ex­pan­sion in the third quar­ter, but con­tin­ued its growth slow­down to four per­cent from 10.1% in July-Septem­ber 2017 and 5.5% in the sec­ond quar­ter. Con­struc­tion ac­cel­er­ated to 16.1% from four per­cent the past year and 14.1% in the sec­ond quar­ter. Min­ing and quar­ry­ing fell by 1.1%, com­pared to 7.9% growth last year though still bet­ter than the sec­ond quar­ter’s 6.9% drop.

Agri­cul­ture, hunt­ing, forestry and fish­ing dropped 0.4% com­pared to 2.6% growth in the third quar­ter last year and 0.3% in the sec­ond quar­ter.

Fi­nance Sec­re­tary Car­los G. Dominguez III said in a state­ment that the econ­omy is “ex­pected to re­gain its stride as the gov­ern­ment has sus­tained its ac­cel­er­ated in­vest­ments in in­fra­struc­ture and so­cial ser­vices on the back of a strong fis­cal po­si­tion… the growth mo­men­tum would be on an up­ward tra­jec­tory from hereon as the gov­ern­ment rolls out more big-ticket in­fra­struc­ture projects un­der the ‘Build, Build, Build’ ini­tia­tive in the months ahead, im­ple­ments more mea­sures to make in­fla­tion ta­per off closer to the gov­ern­ment-set tar­get in 2019, and pur­sues more pol­icy re­forms to make the do­mes­tic econ­omy more con­ducive to in­vest­ments.”

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