The Philippine economy grew 6.9 percent year-on-year in the third quarter, the second fastest in Southeast Asia, on the back of higher government spending and manufacturing output, the Philippine Statistics Authority said Thursday.
“We are likely to rank second in Asia this quarter, next to Vietnam’s 7.5 percent and ahead of China’s 6.8 percent and Indonesia’s 5.1 percent,” Economic Planning Secretary Ernesto Pernia said.
Data showed the GDP growth picked up from a revised 6.7 percent in the second quarter, but was slower than 7.1 percent registered in the third quarter of 2016.
“We attribute the country’s growth performance to sustained strong growth in exports and improvements in public spending, which then boosted the manufacturing subsector and the services sector,” Pernia said.
The PSA said manufacturing contributed the most to the country’s GDP with a 9.4 percent year-on-year growth in the third quarter.
Growth in the first nine months averaged 6.7 percent, within the government’s target range of 6.5 percent to 7.5 percent for the year.
Industry recorded the fastest growth among major sectors at 7.5 percent, followed by services with 7.1 percent and agriculture with 2.5 percent.
Net primary income from the rest of the world grew 5.7 percent. As a result, the gross national income posted a growth of 6.7 percent in the third quarter.
“With the country’s projected population reaching 104.9 million in the third quarter of 2017, per capita GDP grew by 5.4 percent. Meanwhile per capita GNI and per capita household final consumption expenditure grew by 5.2 percent and 3.0 percent, respectively,” the PSA said.
Pernia said public consumption rose 8.3 percent on ahigher spending on personnel services with the raise in the base pay of civilian government employees and allowances of the military and uniformed personnel and the filling-up and creation of positions at the Department of Education.
“We are now seeing a sustained improvement in government spending in a run-up to our massive infrastructure program”•the Build, Build, Build”•which will continually unfold in the months ahead. This is expected to ramp up public spending even further. We see construction activities and public spending making a headway in line with the government’s aim to spend 5.3 percent of GDP this year for infrastructure and up to 7.4 percent by 2022,” Pernia said.
Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said the strong third-quarter expansion, together with manageable inflation, were in line with the regulator’s expectations and validated current policy settings.
“GDP growth also remains within [the] current potential which will expand further in the future as investments in both physical and human capital ramp up,” Espenilla said. He also downplayed the possibility of an overheating economy to overheat.
“That begins to be a concern if we are persistently growing above potential. Not there yet. To keep growing strongly without overheating, we expand potential itself—-through high-quality investments funded in a sustainable manner,” Espenilla said.
Finance Secretary Carlos Dominguez III said an even better growth could be achieved in the succeeding quarters as the Duterte administration ramped up infrastructure spending and human capital development to boost the economy and move closer to financial inclusion.
“Notwithstanding the continued political noise and the terrorist activity in Marawi, the economy managed to perform well in the third quarter as the government posted a double-digit increase in public investments and pursued initiative to further improve fiscal health and boost investor sentiment,” Dominguez said in a statement.
Dominguez said he was confident that the official full-year target expansion of 6.5 percent to 7.5 percent could be achieved as the government accelerated spending on infrastructure which had the highest multiplier effect on growth and human capital formation.
ING Bank Manila senior economist Joey Cuyegkeng said the acceleration of government construction under the ambitious P8.44-trillion ‘Build, Build, Build’ program would be favorable for the fourth quarter.
Under the program, the government aims to build more airports, seaports, highways, railways, water and irrigation projects.
“We keep our 6.7 percent fourth-quarter GDP growth forecast and raise our full year forecast to 6.7 percent from 6.6 percent,” Cuyegkeng said.