PH economy grows by 7.6% in Q3, the second highest in ASEAN region
The economy grew 7.6 percent in the third quarter despite soaring inflation, spurred by an increase in household spending as people get back to a “pre-pandemic life.”
The growth in the gross domestic product (GDP) beat expectations of 6.3 percent as well as the 7 percent growth posted in the same quarter last year, Socioeconomic Planning Secretary Arsenio Balisacan said in a briefing Thursday.
The country’s third-quarter performance meant the Philippines had the second-highest growth in the region next to Vietnam’s 13.7 percent and ahead of Indonesia’s 5.7 percent.
The surprising performance was driven by increased spending on restaurants, hotels, and travel, as well as investment, as schools restarted face-to-face classes and COVID-19 restrictions were lifted.
“This turnout signifies that Filipino families are close to returning to pre-pandemic life,” Balisacan said. “Having been deprived of mobility for two years, you just want to go out and see the world again.”
But he warned the country faced a “considerable burden” from high inflation and the impact of recent tropical storms that badly damaged crops.
Inflation hit 7.7 percent in October, the highest in nearly 14 years, due to surging food prices.
Like central banks around the world, Philippine monetary policymakers have said further interest rate hikes were needed to tame inflation.
“The economy could have been stronger (in the third quarter) if not for this inflation,” said Balisacan.
The country was on track to meet the government’s annual growth target of 6.5 to 7.5 percent for the entire year, he added.
But London-based Capital Economics expects Philippine growth to slow in the coming months as the higher cost of living and weaker global demand bite.
“We think economic growth will slow from 7 percent this year to just 5 percent in 2023,” said Gareth Leather, senior Asia economist.
In an online briefing, national statistician and civil registrar general Dennis Mapa said the economy gained strength from the agriculture, industry, and services sectors. He said agriculture and forestry grew by 2.2 percent, industry by 5.8 percent, and services by 9.1 percent.
Mapa said the last time the economy grew by 7.7 percent in the first three quarters was in 2010.
Rizal Commercial Banking Corp. chief economist Michael Ricafort told the Manila Standard that GDP growth in the last quarter could still be at least 7 percent due to the continuous reopening of the economy. He said GDP for the whole year might average at least 7.6 percent.
Ricafort said the relatively stronger GDP and other economic data would still support further local policy rate hikes that help stabilize the peso exchange rate and overall inflation.
In a roundtable discussion with Asian chief executive officers in Cambodia, President Ferdinand Marcos Jr. said the economy was headed in the right direction, but external forces posed a challenge.
“The important elements are in place, and you can feel that our economy is trying to grow but is really being pummeled by the forces outside [over] which we have no control,” the President said.
The President cited the recent economic figures for the third quarter, with the country’s unemployment rate dropping to 5 percent.
Speaker Martin G. Romualdez on Thursday said the President’s efforts to revive the pandemic-stricken economy have begun to pay off, as evidenced by the 7.6 GDP growth for the third quarter.
“President Marcos’ silent hard work on uplifting the economy is beginning to work. The economic expansion in the months of July to September 2022 is proof of that,” Romualdez said.
Albay Rep. Joey Sarte Salceda, chairman of the House committee on ways and means, highlighted the signs of strong economic growth so far.
“OFW (overseas Filipino workers) remittance figures also jumped in August, near the end of the quarter. Data from the Bangko Sentral ng Pilipinas (BSP) showed cash remittances sent through banks stood at $2.72 billion in August, higher than the $2.60 billion a year earlier. The growth in remittances was the fastest since 4.4 percent in June,” Salceda said.
“There was also 24.79 percent year-on-year growth in tax collections in September, indicating that economic activity, the base of taxation, was getting stronger,” Salceda said.
“The September jobs report also showed that the largest year-on-year jobs gainer was manufacturing, at 1.09 million more jobs. Manufacturing jobs growth tends to indicate positive macroeconomic fundamentals. In total, 4 million jobs were created year-on-year by September,” Salceda noted.
Budget Secretary Amenah Pangandaman attributed the robust economic performance to continuing efforts to push and open the economy, increased mobility with the reopening of face-to-face classes of about 28 million learners, faster vaccination rollout, and initiatives to bring down unemployment and poverty.
The growth rate was also due in large part to faster growth in wholesale and retail services, financial and insurance activities, and the construction industry.
“The positive growth is consistent with the overall goal of the current administration to reinvigorate job creation and poverty reduction,” she said.