Double-digit investment growth allowed the Philippines to sustain growth averaging 6.1 percent in the third quarter, never mind this was the slowest in three years.
According to the Department of Finance (DoF), what is more important is that the performance ranked the Philippines among the fastest in the region, outranked only by China and Vietnam.
Data from the DoF show 26 percent of aggregate local output growth, measured as the gross domestic product (GDP) was contributed by investments in the first three quarters of this year, significantly more than the 23.6 percent contribution in the same period a year ago.
According to the DoF, this development will help sustain the rapid economic growth of the country over the medium term.
Other contributing factors to sustained growth include the 16.1 percent growth in construction, the robust services sector and healthy exports grew by 14.3 percent even though the economy is hounded by global and domestic uncertainties.
Other economic sectors helping slow the third-quarter expansion include the agriculture which contracted by 0.4 percent and the slowdown in manufacturing, with food production slowing at half the rate to 2.6 percent from the previous 5 percent.
Likewise, tobacco and alcoholic beverages’ production dropped by 21.4 percent as the full impact of the first tranche of the ongoing tax reform program began to bite.
Finance Undersecretary Gil Beltran said some of the plans the government will pursue to address the economic slowdown include enacting the remaining tax reforms, dampening inflationary pressures with supply-boosting measures, implement agricultural productivity programs and opening imports of agriculture inputs for manufacturing such as sugar.
Beltran said the local output growth print in the remaining quarter this year historically accelerates due to greater spending during the long Christmas holidays and election-related spending for the upcoming electoral exercise in May.
But he also acknowledged that target growth of 6.5 to 6.9 percent should be difficult to meet.
“It will be a little difficult but not impossible,” Beltran told reporters.
“We have a 52.5 percent increase in FDI (foreign direct investments) in the first seven months of the year. That’s almost $6 dollars,” he said.
On the peso, Beltran said the local unit is recovering lost ground in recent days and that the central bank should start buying up excess US dollars as that happens.
The exchange rate averaged P52.923 per dollar on Friday.
“It’s usual during the last three months of the year for the peso to strengthen. Last year it was already about to reach P50 but it moved back to P48,” he said.