Economic growth picks up to 6% in Q3

MANILA, Philippines - Economic growth slightly picked up in the third quarter as government spent more and household consumption increased, the country’s economic manager said.

In a press briefing yesterday, Economic Planning Secretary and National Economic and Development Authority (NEDA) director general Arsenio Balisacan said gross domestic product (GDP) growth hit the six-percent mark in the third quarter, an improvement from 5.8 percent the previous quarter and the three-year low five percent in the first three months.

In the same quarter last year, GDP expanded at a slower pace of 5.5 percent.

He said for the first nine months of 2015, growth stood at 5.6 percent, making a six-percent full-year target “very much likely given even better prospects for the last quarter.”

This makes the Philippines one of the fastest-growing major Asian economies. The country’s GDP growth was the third fastest after China’s 6.9 percent and Vietnam’s 6.8 percent.

Balisacan said strong domestic demand fueled output growth in the third quarter, led by significant improvements in government spending and household consumption. In July to September, public sector performance improved leaps and bounds, with government expenditure increasing from 3.9 percent to 17.4 percent.

For the first nine months alone, the average government final consumption expenditure has already reached 7.2 percent, a lofty leap from last year’s contraction of 0.2 for the same period, and a 2014 full-year rate of 1.7 percent.

“This simply shows that the government is proving successful in its efforts to overcome the spending bottlenecks that hampered growth in the first semester,” he pointed out.

In Malacanang, Press Secretary Herminio Coloma Jr. and presidential spokesman Edwin Lacierda said President Aquino has ordered to intensify government spending before the year ends, following continuous underspending early this year.

Coloma said government would intensify even more efforts to challenges in the last quarter of the year in view of the foreseen severe El Nino until mid-2016 which may adversely affect the economy.

Meanwhile, with availability of more jobs, increasing employment and income, low inflation and inflow of overseas Filipino remittances, household consumption also grew 6.3 percent. Filipino households increased their spending in the third quarter mostly on food and non-alcoholic beverages, miscellaneous goods and services, transport, restaurants and hotels, and communication, Balisacan said.

“This growth trajectory we are seeing will likely continue in the fourth quarter as we expect domestic demand to still pick up during the holiday season. This, along with low inflation, low oil prices, and the anticipated effects of election spending on the country’s growth, supports this outlook. Moreover, the services sector will remain strong and investments are likely to go up due to the expected increase in disbursements,” he added.

The modest growth of the agriculture sector, on the other hand, shows the impact of El Niño, as yields and harvests for palay and sugarcane were most affected due to inadequacy of irrigation water and rain. The slight improvement in the sector’s performance is largely contributed by stronger growth in livestock, poultry, and fishery subsectors.

However, Balisacan said some risks still remain that may impede growth potential. One is the still lingering effects of El Niño on the economy, especially for agriculture. The government has been taking measures to mitigate the impact particularly on food security and potable water supply. Another risk would be the uncertainties that are naturally brought by an impending change of leadership, with next year’s national elections. –with Delon Porcalla