Financial market analysts project slower economic growth in the third quarter at 5.7 to 6 percent mainly due to lower agricultural output.

The forecast range is lower than the 6.3 percent recorded in the second quarter by the Philippine Statistics Authority.

“The agriculture sector continues to underperform due to typhoons,” Reyes Tacandong & Co. senior adviser Jonathan Ravelas said in a text message.

The Department of Agriculture reported P1.17 billion in agricultural damage caused by typhoon “Carina” in July.

Belt-tightening

Rizal Commercial Banking Corp. chief economist Michael Ricafort said higher prices of food and utilities would likely pull down economic growth as consumers tightened their belts.

He added production in other industries likely slowed down.

“There were higher food transport costs due to floods and disruptions to business activities and power supply due to heavy rains,” Ricafort said.

The national statistician reported food and non-alcoholic drinks made up 56 percent of the total basket of goods and contributed 2.4 percentage points to the overall inflation of 4.4 percent in July.

This surpassed the government target of 2 to 4 percent.

In August, however, inflation dropped to 3.3 percent after the government started implementing a lower rice tariff on imported rice at 15 percent from 35 percent.

“The tariff reduction translates into a 20 percent discount on imported rice that could further ease inflation,” Ricafort said.

Bright spots

Despite relatively high inflation rates, Ricafort said consumption has remained robust as he shared the bulk of the country’s population or over 113 million Filipinos are working.

“Local employment data is already among the best in 19 years,” he said.

Philippine economic growth estimate could normalize to around 5.5 to 6.5 percent for 2024 and beyond amid the country’s favorable demographics,” Ricafort continued.

National statistics showed the unemployment rate fell to 4.7 percent in July from 4.9 percent in the same month last year.

This reflected an additional 1.07 million more workers to the wholesale and retail trade sectors, the biggest job growth driver during the period.