THE economy expanded 7.1 percent in the third quarter of 2016, the first three months of the Duterte administration, as the agriculture sector rebounded from consecutive months of decline, the Philippine Statistics Authority said Thursday.
The 7.1-percent expansion in the third quarter gross domestic product, faster than the 6.2 percent in the same period a year ago, made the Philippines the fastest growing economy in Asia so far. (Related story on B1)
“We are higher than China’s 6.7 percent, Vietnam’s 6.4 percent, Indonesia’s 5.0 percent, and Malaysia’s 4.3 percent. India’s has not yet released their data,” said Undersecretary For Policy Planning Rosemarie Edillon.
The 7.1-percent growth brought the average growth rate for the first three quarters to 7.0 percent after hitting 6.9 and 7 percent in the first and second quarters, respectively. This was also the fastest since the 7.5 percent growth rate recorded in the second quarter of 2013.
The national government has set the official growth target for 2016 at six to seven percent.
Given this, Edillon said that for the fourth quarter, the country only needs to attain a 3.4-percent growth to attain the low-end target of 6.0 percent.
To reach the high-end target of 7.0 percent, the economy needs to grow by 6.9 percent in the fourth quarter.
Edillon said investments continue to drive economic growth, indicating its sustainability. The growth in investments in durable equipment remained strong, she added.
Private sector investments in construction grew significantly by 16.2 percent this quarter from last year’s 4.0 percent. Public investment in infrastructure remained strong, with public construction expanding by over 20 percent for the third quarter.
“Household consumption also remains a pillar of strength for the domestic economy, Edillon said.
Private consumption grew by 7.3 percent, higher than last year’s 6.1 percent, supported by low inflation, low interest rates, better labor market conditions and the steady, though slower growth in overseas Filipinos’ personal remittances.
The government dole program, the Pantawid Pamilyang Pilipino Program or 4Ps, also provided additional boost to consumer demand.
External demand also improved, with growth in exports of goods steadily rising to 7.8 percent.
“From the supply or production side, we are happy to note the recovery signs of agriculture, which is one of the major development priorities of this administration,” Edillon said.
With the normalization of weather conditions, agriculture grew by 2.9 percent, breaking five consecutive quarters of decline.
She said the sector recovered from the prolonged drought brought by the El Niño phenomenon, which already dissipated in the third quarter of 2016.
Meanwhile, industry growth improved to 8.6 percent, with strong showings in manufacturing and construction.
However, services growth eased to 6.9 percent from last quarter and a year ago.
“Services saw slower, though still reasonable, growth. Expansion in the retail trade, repair of motor vehicles, wholesale and retail and communications subsectors grew strongly,” Edillon said.
Edillon also cited a slowdown in the communications subsector as the two large telecommunications companies closed a deal to buy out San Miguel Corp. to gain control of crucial frequencies.
Public administration, though expanding by 3.7 percent, slowed down compared to the previous quarters due to the waning effects of election spending.
“All things considered, our economy’s strong growth in the third quarter is a very good sign of things to come. Together with a low inflation environment, a sustained strong growth bodes well for continued poverty reduction this year,” Edillon said.
“We see this momentum to continue in the fourth quarter of the year,” she added.
The Palace said the GDP growth was proof that the administration was more than its war on illegal drugs.
“This underscores that… we have a sound economic vision and agenda that will spur growth to benefit the lives of our countrymen, especially the poor and the marginalized,” said Communications Secretary Martin Andanar.
Finance Secretary Carlos Dominguez attributed the growth to President Rodrigo Duterte’s accelerated spending on infrastructure and assured the public there will be no letup in the administration’s commitment to spend big on this growth driver as well as on human capital and social protection to guarantee high and inclusive growth.
The National Economic and Development Authority said that the strong growth “bodes well for continued poverty reduction this year.”
With the projected population reaching 103.5 million in the third quarter of 2016, per capita GDP grew by 5.3 percent and per capita gross national income by 4.6 percent. “These are both higher than the respective growth of 4.4 percent and 4.5 percent in 2015,” the PSA said.
News of the GDP growth surprised experts after Duterte sparked concerns among foreign investors over his controversial war on drug crime and a decision to pick fights with the United States and the United Nations on the issue.
“It was a surprise for the financial markets,” First Grade Holdings securities analyst Astro del Castillo told AFP, referring to the growth figure.
“It affirms our view that fundamentals remain intact despite the political noise.”
The country’s stock market, which is at a seven-month low, rose one percent Thursday but the peso remains stuck near eight-year lows, with analysts blaming political developments as well as expectations the United States will raise interest rates.
The greenback was up 0.2 percent at 49.40 pesos in late morning trade, with analysts warning it could surge to P50 by the end of the year.
In concerns echoed by other foreign business groups, international credit rating agency Standard & Poor’s warned in September that Duterte’s crime war threatened the Philippine economy and endangered its democratic institutions.
He won elections in a landslide in May after vowing an unprecedented crackdown on illegal drugs in which 100,000 people would die.
More than 4,000 people have been killed since he took office on June 30. About 1,800 were shot dead by police and about 2,600 others were murdered by unidentified attackers, according to official statistics. With John Paolo Bencito, AFP