The economy grew at a stronger rate of 6.9 percent in the third quarter of the year, ignoring the political noise coming from the government’s violent drug war and the declaration of martial law in Mindanao.
The third-quarter performance beat expectations of a 6.6-percent expansion amid the siege in Marawi City and turned market analysts more bullish. It brought the average growth in the first nine months to 6.7 percent, above the lower limit of the government’s target range of 6.5 percent to 7.5 percent this year.
Finance Secretary Carlos Dominguez is more upbeat. He sees the gross domestic product performing stronger in the succeeding quarters as the government accelerates infrastructure spending.
“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.
A sustained spending on infrastructure for the rest of President Rodrigo Duterte’s term and a young working population hold the key to a robust economic expansion. Infrastructure projects directly create jobs and will speed up the flow of goods and services, while a young and growing population is expected to boost spending on food, cars, real estate, cellular phones and local travel.
Key economic sectors are contributing to the economic expansion, with industries registering the fastest growth of 7.5 percent, followed by services with 7.1 percent.
“We’re firing on all cylinders and we should see further acceleration in GDP growth this quarter if the government’s infrastructure commitments are met,” says Emilio Neri, an economist at Bank of the Philippine Islands. “We expect the service sector to remain strong as companies become more involved in the government’s Build, Build, Build program.”
But companies continue to face regulatory risks. The country’s internet speed, a crucial factor in improving the investment climate in the Philippines, is one of the slowest in the Philippines because of the myriad approvals required from local government units and national agencies in building cell sites. The same red tape is encountered by power generating and infrastructure companies.
The government’s regulating agencies and institutions must do their share in helping the economic expansion. They should recognize the fact that the economy is on a roll.