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Philippines economy grows faster by 5.9 percent in 3rd quarter

Louella Desiderio - The Philippine Star
Philippines economy grows faster by 5.9 percent in 3rd quarter
National Statistician Dennis Mapa, at a press conference yesterday, said the country’s gross domestic product (GDP) growth was at 5.9 percent in the third quarter, faster than the 4.3 percent in the second quarter.
Philstar.com / Irra Lising

MANILA, Philippines — The Philippine economy expanded at a faster pace in the third quarter from the previous quarter, supported by a turnaround in government spending.

National Statistician Dennis Mapa, at a press conference yesterday, said the country’s gross domestic product (GDP) growth was at 5.9 percent in the third quarter, faster than the 4.3 percent in the second quarter.

The third quarter GDP growth, however, is slower than the 7.7 percent expansion in the same period last year.

“This performance makes our economy the fastest among the major emerging economies in Asia that have released their third-quarter 2023 GDP growth,” National Economic and Development Authority Secretary Arsenio Balisacan said, noting Vietnam’s growth at 5.3 percent, Indonesia and China at 4.9 percent, and Malaysia, 3.3 percent.

On a quarter-on-quarter basis, the GDP posted 3.3 percent growth in the third quarter.

Balisacan said government spending contributed 2.1 percentage points or 36 percent to the GDP growth in the third quarter.

Government final consumption expenditure accelerated in the third quarter at 6.7 percent, a reversal of the 7.1 percent contraction in the second quarter.

Balisacan said that by heeding the call of the economic team for the implementation of catch-up expenditure plans, national government agencies and local government units helped reverse the contraction seen in government spending in the previous quarter.

“We hope to maintain this momentum for the remainder of the year and the years to come,” he said.

Household consumption growth, meanwhile, slowed to five percent in the third quarter from 5.5 percent in the previous quarter, amid a rise in food inflation to 8.2 percent in the third quarter from the previous quarter’s 7.4 percent.

All major economic sectors posted positive growth in the third quarter, with agriculture growing at 0.9 percent, industry at 5.5 percent, and services at 6.8 percent.

For the January to September period, the economy grew by 5.5 percent. “The economy will need to grow by 7.2 percent year-on-year for the fourth quarter of 2023 to attain at least the low end of the government’s target of six percent to seven percent for the entire year of 2023,” Balisacan said.

While he believes the growth target for the year is “still doable,” he said the economy faces challenges such as threats from geopolitical tensions, as well as domestic inflation.

He said reducing inflation would significantly improve the country’s economic performance.

“Inflation is key to the revival of the robust growth in consumption spending. And so the focus is ensuring that reduction, that decrease in inflation reported for October 2023 will be sustained in the coming months,” he said.

Inflation eased for the first time in three months to 4.9 percent in October from 6.1 percent in September amid slower food price upticks.

With the El Niño projected to intensify in the coming months until early 2024, Balisacan said the government will provide much-needed support for agricultural production in the provinces.

For farmers in provinces that cannot produce during the El Niño, he said the government would provide them with emergency employment opportunities.

“We emphasize that non-monetary measures to protect the purchasing power of Filipinos remain crucial as we address the issue of high inflation,” he said.

He maintained the government will continue to take advantage of liberalization reforms and intensify investment promotion efforts to boost growth and generate higher-quality employment opportunities.

“With inflation back under control and growth back on track, President Marcos has the space and the opportunity to work on policies and priorities that are forward-looking,” Albay Rep. Joey Salceda said in reaction to the latest growth figure.

He said the favorable growth and inflation figures should put the Chief Executive “back in a position of strength – and that is leverage for more long-term reforms,” as the country recovers from the pandemic and from record-high global inflation.

“Moving forward, Filipinos can expect that while global conditions will remain volatile and uncertain, the President has more tools to work with, thanks to good growth numbers for the past quarter,” Salceda, chairman of the House ways and means committee, added.

Senior Deputy Speaker Aurelio Gonzales Jr., for his part, said he expects the economy to grow faster in the last quarter of this year.

“The last quarter of the year is usually a growth period because of the Christmas season, when workers in both the government and private sectors receive their yearend bonuses, cash gifts and other incentives,” Gonzales of Pampanga’s third district said.

It is also the time when millions of overseas Filipino workers and other Filipinos abroad send more money to their families and relatives back home, he said.

“So we can reasonably expect increased spending from our people. Business will anticipate this surge by producing more products and offering more services. We have already started seeing evidence of more economic activities during this season,” Gonzales said.

Sen. Ramon Revilla Jr. said the Marcos administration is apparently in the right direction in addressing inflation and steering the country to growth territory.

“What we need now is to continue what we are doing so that our countrymen can feel the progress of our economy,” Revilla said. “This is a good sign that we can address inflation and rising prices.”

“While we have to hit 7.2 percent growth in Q4 to attain our target for this year, I am optimistic that we will be doing even better by year-end,” he said. – Delon Porcalla, Cecille Suerte Felipe

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