Economic growth decelerates in Q3

MANILA, Philippines - The Philippine economy slowed down in the third quarter of the year, growing by 5.3 percent from the 6.4 percent posted in the previous quarter and the 7 percent posted the same period last year, the Philippine Statistics Authority reported on Thursday.

Socioeconomic Planning Secretary Arsenio Balisacan said the sectors of manufacturing, trade, real estate, renting and business activities, and construction were the main contributors of growth in the period covering July to September 2014.

"However, deceleration in sub-sectors such as financial intermediation and the contractions in agriculture and public administration tempered the pace of growth," Balisacan said.

The financial intermediation sub-sector plunged from 12.1 percent to 7.7 percent, attributed to the moderation in banking institutions (17.3 percent to 7.2 percent), he said.

Balisacan added that by far, the biggest decline was observed in agriculture, fishery and forestry sector, which contracted by -2.7 percent. Crop production, which accounts for almost half of the sector's total output, contracted by -5 percent.

"Palay production was adversely affected by typhoons 'Glenda' and 'Luis,' onset of 'habagat.' Regarding coconut, farms in the Visayas are yet to recover from Typhoon 'Yolanda' in addition to the scale insect infestation," he said.

Growth in public construction made a free fall from 19.1 percent to -6.2 percent, which the Cabinet secretary attributed to lags in the submission of documentary requirements by concerned agencies.

The manufacturing sector contributed the most to the gross domestic product (GDP) growth in the third quarter, despite the slowdown in its gross value added from 8.9 percent in 2013 to 7.2 in 2014.

"On the demand side, the biggest contributor to growth was net exports which grew by 125.7 percent. Supported by the strengthening of the global manufacturing industry, the country recorded a trade surplus in the third quarter of 2014 amounting to P6.9 billion, a recovery from the P26.9-billion deficit a year ago," Balisacan said.

With the third quarter performance, Baliscan said the GDP growth in the first three quarters is likely at 5.8 percent.

"Admittedly, even hitting the low end of the target growth rate for the year would pose a big challenge.  We need to grow by at least 8.2 percent in the fourth quarter," he said. 

Baliscan expects the economy to bounce back after its weak performance this year.

"Going forward, do we see a brighter prospect?  The short answer is 'yes.'  We expect the private sector to maintain a robust performance; government will have adjusted to the new protocols... And, as I address you today, the reconstruction assistance in the Yolanda-affected areas is already gaining traction," he said.