January 22, 2020 at 07:45 pm
Julito G. Rada
The Philippine Statistics Authority on Wednesday revised downward the third-quarter gross domestic product growth to 6 percent from the previous estimate of 6.2 percent, taking into account the changes in the contribution of other services, construction, transport, storage, and communication.
The revision―done a day before the release of the fourth-quarter and 2019 GDP today―brought economic growth in the first three quarters to 5.7 percent, down from the previous 5.8 percent. Economists said with the latest adjustment, the government’s growth target of at least 6 percent for 2019 could not be met.
PSA said in a statement that major contributors to the revision were other services, which were revised from 5.1 percent to 4.2 percent; construction, from 16.3 percent to 15.4 percent; and transport, storage, and communication, from 9.1 percent to 8.2 percent.
The PSA revises the GDP estimates based on an approved revision policy (PSA Board Resolution No. 1, Series of 2017-053) which is consistent with international standard practices on national accounts revisions.
ING Bank Manila senior economist Nicholas Mapa said in a report that the revision “dimmed hopes” for full-year growth to remain above 6 percent in 2019.
“The streak of years above 6 percent is currently seven, and fourth-quarter GDP will need to crest 6.8 percent to pole vault to a 6-percent finish and complete the tale of two halves,” Mapa said.
Mapa said the ill effects of the Bangko Sentral ng Pilipinas’ 2018 rate hike cycle continued to feed through the economy with the latest revision to the third-quarter GDP showing a more substantial pullback in investment activity.
“Capital formation was revised lower by P3.95 billion, reflecting a substantial revision to private construction and a drop off in durable equipment purchases. In terms of contribution, capital formation
sapped 0.70 percentage [previously -0.55] points from overall growth in the third quarter while the trade gap was actually upgraded with exports moved up and imports downgraded,” he said.
Mapa said the continued sluggish growth momentum would definitely move the BSP to ease policy rates again in February with the ill effects of the aggressive 2018 tightening phase still being felt in third quarter 2019.
“The recent volcanic eruption and the impending disruption in economic activity from the damage will likely weigh on the recovery momentum further with both fiscal and monetary policy called upon to bolster the economy amidst the higher growth pitch of 6.5-7.5 percent [in 2020],” he said.
The PSA is scheduled to release the fourth-quarter and full-year 2019 GDP data on Jan. 23.
ATR Asset Management said growth was expected to pick up to 6.3 percent in 2020 from the expected 5.9 percent last year, as the government’s higher fiscal spending and robust private consumption would offset the impact of the feared explosive Taal Volcano eruption.
Ivan Ante, multi-asset portfolio manager of ATRAM, said in a presentation Wednesday during the Insular Life economic briefing in Makati City, that the economy would continue to be resilient in the face of domestic and global headwinds.
“If Taal explodes, that is bad for the markets. Economic growth will die down and inflation will shoot up because of shortages in food supply,” Ante said.
“But the unspent budget last year plus the new budget this year will boost economic growth. GDP is expected to grow by 6.3 percent this year on the back of robust consumption and the rebound of government spending, particularly on infrastructure projects,” Ante said.