Trailing economy: A file picture showing Marcos speaking beside a portrait of his father, former president Ferdinand Marcos, by his tomb during All Saints’ Day in Manila last week. The country’s GDP growth for the first nine months is 5.8% – below his target of 6% for the year. — AFP
MANILA: The Philippine economy grew at its slowest pace in over a year as exports dropped and storms hit farm output, giving the central bank fresh impetus to cut interest rates further.
Gross domestic product (GDP) in the July-to-September period expanded 5.2% from a year earlier, the statistics agency said yesterday, trailing the 5.7% median estimate of economists in a Bloomberg survey.
That compared with 6.4% growth in the second quarter and was the weakest reading since the second quarter last year.Growth for the first nine months of the year was 5.8%, below the goal of President Ferdinand Marcos Jr’s administration to expand the economy by at least 6% in 2024. Quarter-on-quarter, the economy posted a slightly faster-than-expected 1.7% expansion.
Economic planning secretary Arsenio Balisacan said the economy needs to grow by at least 6.5% in the current quarter to meet the government’s goal.
“We remain optimistic that this growth target is attainable,” he said.
Balisacan said he expects the central bank to continue reducing interest rates to spur investment such as in construction.The currency and stock markets weakened.
Manila’s benchmark stock index fell 2.7% by 11:03am, poised for its lowest close in nearly two months.
The peso was down 0.1% at 58.745 against the US dollar.
The Bangko Sentral ng Pilipinas has delivered two quarter-point cuts since August to bring its key interest rate to 6%.
Governor Eli Remolona has signalled that GDP data will guide the policy easing path, with another 25-basis-point reduction possible next month that could help bolster the economy.
Consumption, which makes up more than 70% of the nation’s output, rose 5.1% while growth in government spending slowed to 5% from 11.9% in the second quarter.
Exports declined 1% in the third quarter, after expanding 4.2% in the previous three months.
“While the worst is probably over for private consumption in the Philippines, we doubt this pace of consumption growth is sustainable,” Capital Economics’ Shivaan Tandon said in a note.
Tandon said downside risks to domestic demand have risen and, with the dollar strengthening, the central bank may opt “for fewer rate cuts.”
The agriculture sector, which accounts for nearly a tenth of Philippine GDP, declined 2.8% as typhoons, including Yagi and Gaemi, compounded the rainy weather in the third quarter.
Growth in industry and services sectors both slowed to 5% and 6.3%, respectively. — Bloomberg
