The country’s local output measured as the growth domestic product (GDP) remained among the fastest in the region, placing third at 6.1 percent in the July-to-September quarter although slightly slower than the previously recorded 6.2 percent in the second quarter.
The slowdown marked a significant change from the 7.2 percent expansion in the same period a year-ago and acknowledged as the direct consequence of above-target inflation for the period.
Socioeconomic Planning Secretary Ernesto Pernia said the third-quarter GDP outcome was a “respectable pace” despite weaker consumption and moderating consumer confidence.
Still, the NEDA chief said, the country’s economic resilience has allowed the $314 billion economy to expand for 14 consecutive quarters in a series.
“Let me say that the Philippine economy growing at least six percent for 14 consecutive quarters suggests that we are now on a higher growth trajectory,” Pernia told reporters, noting the need for more partnerships with the private sector in production capacity expansion and innovative investment programs.
“We are not exactly exuberant about the 6.1 percent growth rate, but still comforted that we remain one of the fastest-growing economies in Asia, next to Vietnam at seven percent, China at 6.5 percent and way ahead of Indonesia at 5.2 percent,” he added.
Data from the Philippine Statistics Authority (PSA) show that among the major economic sectors, services recorded the fastest growth at 6.9 percent, followed by Industry with a growth of 6.2 percent while agriculture, hunting, forestry and fishing (AHFF) exhibited a downtrend by 0.4 percent.
With the GDP disappointing expectations, third-quarter growth averaged 6.3 percent, a slowdown from the previous quarter expansion averaging 6.8 percent.
Also, Pernia said that with Q3 growth at only 6.1 percent, local output growth in the final quarter this year should not be lower than 7 percent to ensure growth falls within the 6.5 percent to 6.9 percent target range.
Union Bank of the Philippines chief economist Carlo Asuncion said he expected a higher figure than the announced third-quarter growth number given the disbursement of public funds consistent with the Build Build Build initiative.
“I expected a higher growth print given stronger government spending. However, inflation’s impact on consumption was seemingly stronger and agriculture output also took a big hit,” Asuncion said.
Inflation was plotted no higher than 4 percent this year by the economic managers but a confluence of events made worse by mishandled supply-side restraints pushed the rate at which prices change past the roof to 6.7 percent as of October.
Another economist, APAC chief economist at IHS Markit Rajiv Biswas, said weak agricultural output definitely impacted the July-to-September growth print.
“Weak agricultural output also impacted on the third-quarter GDP data due to the impact of Typhoon Ompong, which caused damage to agricultural production and infrastructure estimated at around P35 billion,” Biswas said.
“Philippines GDP growth momentum moderated to 6.1 percent year-over-year in the third quarter 2018, reflecting the impact of rising inflation and BSP (Bangko Sentral ng Pilipinas) monetary policy tightening, which have acted as a drag on household consumption,” he explained.
This relates to the decision to contain inflation by a series of monetary policy adjustments that brought the rate at which the Bangko Sentral ng Pillipinas borrows from or lends to banks higher by a total 150 basis points. The adjustments, while helping limit inflation dragon, made borrowing for consumption or investment purposes a significantly more expensive endeavor that punish everyone regardless of station in life.