By Aubrey Rose A. Inosante, Reporter
THE PHILIPPINE economic system expanded by a weaker-than-expected 5.2% within the third quarter, as dangerous climate damage agricultural output and authorities spending, the statistics company stated on Thursday.
Preliminary information launched by the Philippine Statistics Authority (PSA) confirmed Philippine gross home product (GDP) grew by an annual 5.2% within the July-to-September interval, slowing from the revised 6.4% progress within the second quarter and 6% a yr in the past.
This was additionally the weakest progress in five quarters or for the reason that 4.3% growth within the second quarter of 2023.
It was additionally beneath the 5.7% median forecast in a BusinessWorld ballot of 12 economists and analysts.
On a seasonally adjusted quarter-on-quarter foundation, GDP expanded by 1.7%, in comparison with 0.7%.
Regardless of the slower progress, Mr. Balisacan stated the Philippines’ third-quarter GDP print was nonetheless the second-fastest within the area after Vietnam (7.4%).
“Our economic system continues to develop steadily; the most recent GDP figures point out steady growth,” Nationwide Financial and Growth Writerity (NEDA) Secretary Arsenio M. Balisacan stated at a briefing on Thursday.
Philippine GDP progress within the July-to-September interval was higher than Indonesia (4.9%), China (4.6%), and Singapore (4.1%).
For the primary 9 months of the yr, Philippine GDP progress averaged 5.8%, slower than the 6% print a yr in the past. This was barely beneath the federal government aim of 6-7% progress this yr.
“The economic system must develop by not less than 6.5% to fulfill the federal government’s goal for the final quarter 2024. We stay optimistic that this progress goal is attainable,” Mr. Balisacan stated.
He attributed the weaker-than-expected third-quarter progress to the influence of a sequence of typhoons on the agriculture sector.
Agriculture, forestry and fishing shrank by 2.8% within the third quarter, a reversal of the 0.9% progress posted a yr in the past. The sector accounts for round a tenth of Philippine financial output.
“The crops subsector of the agriculture sector posted a year-on-year decline of two.8%, reflecting the impacts of the El Niño phenomenon throughout the planting season and the effects of seven typhoons, along with the Habagat (monsoon), throughout the harvest season,” Mr. Balisacan stated.
He famous the mixed agricultural harm and losses from the six typhoons within the third quarter and the latest Extreme Tropical Storm Kristine has reached P15.8 billion.
On the identical time, the business sector grew by 5% within the third quarter, slowing from 5.6% a yr in the past as a consequence of base results. Building progress slowed to 9% from 14.5% a yr in the past.
Providers expanded by 6.3% within the July-to-September interval, easing from 6.8% in the identical interval in 2023.
“The successive typhoons suspended lessons and work in authorities and a few non-public places of work, leading to administrative delays and supply-chain disruptions,” Mr. Balisacan stated.
CONSUMPTION RISES
In the meantime, family consumption, which accounts for over 70% of the economic system, jumped by 5.1% yr on yr within the July-to-September interval, bettering from 4.7% within the second quarter however regular from a yr in the past.
“Family spending is especially a shiny spot, rising by 5.1%, sooner than the final two quarters as a consequence of slower inflation. The latest coverage price cuts and reserve requirement discount may assist convey in additional liquidity to the economic system and enhance our individuals’s buying energy,” Finance Secretary Ralph G. Recto stated in an announcement.
Mr. Balisacan famous there was a slowdown in tourism and leisure-related spending as typhoons triggered the cancellation of 138 flights within the third quarter.
Gross capital formation, the funding element of the economic system, expanded by 13.1% within the third quarter, a turnaround from the 0.3% dip a yr in the past.
“The turnaround in investments in sturdy tools primarily drove capital formation progress. Non-public building additionally sustained double-digit progress (11.9% from 10.3%), whereas public building slowed down (3.7% from 21.7%) as a consequence of administrative delays and disruptions related to hostile climate circumstances,” Mr. Balisacan stated.
Development in authorities spending sharply slowed to five% within the third quarter from 11.9% within the prior quarter.
‘The climate-related disruption and disturbances that occurred within the final quarter have slowed down this (authorities) spending. And that’s much more so for these which can be associated to infrastructure,” Mr. Balisacan stated.
Exports of products and companies contracted by 1% within the third quarter, a reversal from the two.5% progress a yr in the past.
Imports of products and companies rose by 6.4% within the interval ending September, an enchancment from the 1.6% decline a yr in the past.
“This implied a deep contraction in internet exports by 32.6%. Exports of products have been pulled down by the sharper decline in electronics merchandise, significantly semiconductors, minus 17.9%,” Mr. Balisacan stated.
He stated the business is “present process stock corrections and has but to fulfill the calls for for brand spanking new merchandise within the international market.”
Financial managers are optimistic about sooner progress within the fourth quarter as shopper spending is predicted to choose up throughout the vacation season.
“We anticipate will increase in vacation spending, extra steady commodity costs (given low inflation), decrease rates of interest, and a strong labor market. Within the areas affected by typhoons, restoration efforts will drive financial exercise and, hopefully, construct again higher,” Mr. Balisacan stated.
Mr. Recto stated he expects non-public building to rebound amid decrease rates of interest.
Since August, the Bangko Sentral ng Pilipinas (BSP) has lowered rates of interest by 50 foundation factors (bps) this yr, bringing the important thing price to six%.
‘HUGE DISAPPOINTMENT’
Miguel Chanco, chief rising Asia economist at Pantheon Macroeconomics, stated the third-quarter GDP print was a “enormous disappointment,” though it was higher than its 4.8% forecast.
“For now, we’re sticking to our forecast that full-year GDP progress will slip to five.4% this yr from 5.5% in 2023, implying that headline progress will proceed to sluggish within the fourth quarter to round 4.5%,” he stated in a report.
Shivaan Tandon, Markets Economist at Capital Economics stated the GDP progress is unlikely to be sustained as “slower progress in remittances, fiscal coverage and weaker export demand weigh on exercise.”
“Whereas the worst might be over for personal consumption within the Philippines, we doubt this tempo of consumption progress is sustainable. Admittedly, a continued enhance from decrease inflation and looser financial coverage ought to assist consumption,” Mr. Tandon stated.
Mr. Tandon stated draw back dangers to home demand have gone up, because the US greenback is predicted to strengthen.
“This raises the danger that the BSP, which has arguably been extra targeted on the Fed than different central banks in Asia (barring Financial institution Indonesia), opts for fewer price cuts than could have in any other case been the case,” he stated.
He famous exports will stay below stress as international economic system slows and the outlook stays clouded by potential tariffs to be imposed by US President-elect Donald Trump.
However, ANZ Analysis economists stated non-public consumption will seemingly additional enhance, because the unemployment price fell to three.7% in September and actual wages posted progress within the third quarter.
“The resilience within the Philippines’ labor market and regular progress in remittances will reasonably buttress private consumption going ahead, in our view. We stress on ‘reasonable’ because the regular labor market is partially offset by the necessity for households to rebuild financial savings as relayed within the family sentiment index,” ANZ Analysis’s economist Arindam Chakraborty and Chief Economist Sanjay Mathur stated.
Nonetheless, the ANZ Analysis economists stated exports will seemingly stay muted within the close to time period, amid weak exterior demand.
“General, given the benign inflation outlook over the close to time period and the softer GDP progress in Q3 2024, we expect the BSP will reduce charges by one other 25 bps in December 2024,” ANZ Analysis stated.
BSP Governor Eli M. Remolona, Jr. has signaled a potential 25-bp price reduce in December. If realized, this could convey the benchmark to five.75% by end-2024.
