PH beats Q3 economic growth forecasts despite inflation woes

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Metro Manila (CNN Philippines, November 10) — The Philippines remains well-positioned to hitting its growth target for 2022 after the third-quarter performance beat expectations despite the pain of worsening inflation, with one government official saying "confidence" in the Marcos administration may have beefed up economic activities.

Data from the Philippine Statistics Authority (PSA) showed Thursday that the country posted modest growth in the period at 7.6%, faster than the revised 7.5% in the second quarter.

The latest figure is also well above the 6.12% average yield by a CNN Philippines poll of 12 economists, as weak outlook was weighed down by surging commodity prices and the peso’s depreciation.

READ: Analysts paint slower Q3 economic growth amid high inflation, weak peso

The services sector still produced the biggest boost in the third quarter gross domestic product (GDP), booking 9.1% year-on-year growth rate. It was followed by industry at 5.8%, and agriculture, forestry, and fishing (AFF) at 2.2%.

Services contributed 5.8% to the GDP growth, while industry and AFF added 1.6% and 0.2%, respectively.

Despite rising prices, revenge spending was still felt, with Household Final Consumption Expenditure (HFCE) growing by 8%.

National Economic and Development Authority (NEDA) chief Arsenio Balisacan said the country witnessed "quite rapid growth" in tourism spending after Filipinos were deprived of mobility in the past two years.

According to PSA chief Dennis Mapa, the segments that contributed to the increase in HFCE were restaurants and hotels, transportation, and food and non-beverages—the first two of which were related to tourism and mobility.

"The relaxation of border restrictions and more simplified travel protocols also supported the growth of local tourism and other sectors severely affected by the pandemic, leading to economic expansion in the third quarter. The growth in these sectors brought by our collective efforts to jumpstart the economy runs in parallel with the rise in the country’s labor force," Balisacan said during a press briefing.

Likewise, government spending grew by 0.8%.

Given the latest figures, as consumers are expected to shell out more money in the holiday season, Balisacan was bullish about meeting the 6.5-7.5% target band for 2022.

"We only require 3.3% growth in the fourth quarter to achieve the lower point of the range. Fourth quarter is usually the highest growth rate in a year. We'll probably even grow higher than what we have targeted for the entire year," Balisacan said.

'Confidence' in Marcos' presidency?

Asked if the growth could be attributed to the current administration, the NEDA chief said the July-September period was "already the first quarter of the administration."

Balisacan also stressed that even before that, there was "a clear expectation" that President Ferdinand "Bongbong" Marcos Jr. would win the May presidential race.

"So clearly the fact that the economy continued to perform and even accelerated in the last quarter suggests a good deal of confidence in the administration. We are quite pleased to see that. So will that be sustained? I believe so," he said.

"With the trust that you have, and what we are telegraphing to our investors that the Philippine economy is open for business, listening to our investors and what constraints they face and do our best to address constraints so that they can provide the quality jobs for our poor men," Balisacan added.

The NEDA official said the government would implement landmark reforms such as amendments to the Public Service Act, Foreign Investments Act, Retail Trade Liberalization Act, and the Corporate Recovery and Tax Incentives for Enterprises or the CREATE law.

Amid the high inflation, Balisacan also said the government would continue providing cash transfers, fuel discounts, and other targeted assistance.

He said they are also looking into extending Executive Order No. 171, which significantly reduces tariffs on rice, pork, and corn.