The economy expanded by 5.9 percent in the third quarter of the year, the Philippine Statistics Authority (PSA) reported yesterday, as government spending bounced back from a lackluster performance in the previous quarter.
While the growth in the third quarter is slower than the 7.7 percent expansion in the same period last year, it posted a significant improvement from the weak 4.3 percent increase in the second quarter, as the growth then was dragged by public underspending.
National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said in a press conference yesterday the Philippines’ economic performance in the third quarter is the fastest among major emerging economies in Asia that have released their gross domestic product (GDP) growth figures for the said period.
Vietnam grew 5.3 percent, Indonesia and China at 4.9 percent and Malaysia at 3.3 percent.
The country’s third quarter growth, however, is slightly below the government’s full-year goal.
“The growth acceleration puts the GDP growth rate for the first three quarters of 2023 at 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.
“It’s still doable, still within reach but of course, challenges are there particularly the continued external factors, the threats that come from these geopolitical tensions, and of course, the domestic inflation that we are facing,” he added.
All major economic sectors posted growth, with agriculture growing at 0.9 percent, industry at 5.5 percent and services, 6.8 percent.
Balisacan said the acceleration of public spending in the third quarter is notable, as government final consumption expenditure rose to 6.7 percent in the third quarter from the 0.7 percent contraction in the second quarter, while the growth of government fixed capital formation increased to 26.9 percent in the third quarter from 0.7 percent in the second quarter.
Overall, government spending contributed 2.1 percentage points or 36 percent of the 5.9 percent GDP growth, the NEDA chief said.
“We commend the national government agencies and local government units for responding to the economic team’s call to implement catch-up expenditure plans,” Balisacan said.
“These plans aim to expedite the implementation of government programs and projects and improve the delivery of public services under the 2023 public expenditure program. These actions addressed the contraction 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 added.
Balisacan said household consumption growth slowed down year-on-year to 5 percent in the third quarter of 2023 from 5.5 percent in the previous quarter, as food inflation increased to 8.2 percent in the third quarter from 7.4 percent in the second quarter of 2023.
Gross capital formation likewise declined year-on-year by 1.6 percent, which the NEDA chief said was largely due to the substantial drawdown in inventories and the slowdown in durable equipment.
While inflation recently eased to 4.9 percent in October from 6.1 percent in September, Balisacan said the government will continue to prioritize strategies in response to the potential impacts of El Niño, which is projected to intensify in the coming months until early 2024.
“As we make progress, and I believe as we further beat inflation down, we’d be able to significantly improve economic performance because the inflation is a major factor contributing to the slowdown of household consumption, for example,” Balisacan said.
“As we noted, the domestic demand slowdown (is) primarily because of the higher uptick in inflation, (and) now that we are succeeding in reducing that inflation, we believe that the consumption expenditures, domestic demand will improve this quarter and in the quarters ahead,” he added.