Economy over hump, grows 6.2%

The recovery made the Philippines’ growth performance this year still one of the fastest among relatively large economies, amid a slowing global growth.

Notorious vehicle traffic along EDSA is considered a good indicator of an improving economy no matter the discomfort it brings. AFP

The economy rebounded in grand fashion during the third quarter when the gross domestic product (GDP) expanded 6.2 percent to indicate that the backlash of the delayed 2009 budget has been overcome.

The P3.7 trillion national budget was signed by President Rodrigo Duterte only last April after months of wrangling between the Senate and the House of Representatives over insertions and lump sum funds.

Catch-up efforts to lift the country’s economy bore fruit, Bangko Sentral ng Pilipinas Gov. Benjamin Diokno said.

“The third quarter GDP number exceeds the consensus forecast. The 6 percent full year GDP growth target is a tall order, after a slower than expected first half, but still doable,” Diokno added.

The recovery made the Philippines’ growth performance this year still one of the fastest among relatively large economies, amid a slowing global growth, the country’s top banker noted.

Figures for the third quarter, thus far, showed Vietnam posting the strongest growth at 7.3 percent, followed by the Philippines and China, 6 percent; Indonesia, 5 percent; Taiwan, 2.9 percent; South Korea, 2 percent; United States, 2 percent; European Union, 1.1 percent and Singapore 0.1 percent.

Hong Kong’s economy contracted by 2.9 percent during the period as the Chinese city is being besieged by unrest.

The country’s GDP growth in the third quarter came from a 6 percent growth a year ago, according to the Philippine Statistics Authority (PSA).

“Among the major economic sectors, services recorded the fastest growth at 6.9 percent, while industry expanded by 5.6 percent and agriculture grew 3.1 percent,” it added.

The latest GDP number reverses the lackluster performance in the first two quarters of the year, which averaged at just 5.5 percent, notably below the government’s target of 6 to 7 percent.

Net primary income and gross national income likewise grew 2.9 percent and 5.6 percent, respectively. Per capita GDP, likewise, expanded 4.5 percent with the country’s population projected at 108.3 million.

Socioeconomic Planning Secretary Ernesto Pernia expressed satisfaction with the latest growth figure, noting the robust public consumption during the period as being the primary driver of GDP expansion.

“The stronger growth in public spending in the third quarter contributed significantly to our third quarter performance,” Pernia told reporters.

The Cabinet official stressed the vital role of the agriculture sector, which posted better figures during the third quarter of a 3.1 percent growth versus a .03 percent contraction a year ago.

“In the near-term, we expect the agriculture sector to gain momentum on the back of relatively favorable weather conditions. The El Niño-neutral situation is likely to continue and only fewer typhoons are expected to occur until April 2020,” he said.

“This is an opportune time to ramp up agricultural production, particularly of high-value crops, not to mention infrastructure construction… We urge the Department of Agriculture and other concerned agencies to swiftly implement the programs and projects under the Rice Competitiveness Enhancement Fund,” he added.

With year-to-date GDP growth already averaging at 5.8 percent, Pernia said the economy needs to grow by at least 6.7 percent in the fourth quarter to achieve the lower end target of 6 percent.

While a 6.7 percent growth for the next quarter may be hard to achieve, the Cabinet official took it as a challenge “that we are confidently taking on.”

“(It is) very achievable. We have seen the economy surging and it will continue. Surging by 5 percentage points should be easy,” he added.

Likewise, Finance Secretary Carlos Dominguez III expressed his optimism in reaching the lower band of the target.

“The government has managed to hit its spending targets in the latter part of the July to September period, canceling out the residual effects of the nearly five-month delay in the 2019 (budget) that spilled over into the second quarter,” Dominguez said.

“Further acceleration of state spending on infrastructure and human capital development served as a fiscal stimulus to the economy. This factor combined with decelerating headline inflation and its subsequent stronger consumer spending (sustained) the growth momentum in the July to September period,” he added.