Philippine economy grows 6.9% in Q3

Roxas Boulevard in Manila, Philippines. Growth in the country is underpinned in large part by consumer spending, which is fuelled by the outsourcing industry and remittances from overseas Filipino workers. The country is on track to meet its full-yea
Roxas Boulevard in Manila, Philippines. Growth in the country is underpinned in large part by consumer spending, which is fuelled by the outsourcing industry and remittances from overseas Filipino workers. The country is on track to meet its full-year target growth range of 6.5 to 7.5 per cent, said the government.PHOTO: BLOOMBERG

It posts second-fastest growth in Asia, fuelled by expanding industrial and service sectors

The Philippine economy clocked year-on-year growth of 6.9 per cent in the third quarter, on the back of robust expansion in the industrial and service sectors.

This made the Philippines the second-fastest-growing economy in Asia, behind only Vietnam, which recorded 7.1 per cent in the third quarter, and ahead of China's 6.8 per cent, and Indonesia's 6.5 per cent.

"We are on track to meeting the full-year target range (of 6.5 to 7.5 per cent)," Economic Planning Secretary Ernesto Pernia said at a news briefing yesterday.

The latest growth figure was better than expected - analysts had forecast third-quarter growth at 6.5 to 6.6 per cent. But challenges remain as the year closes, with possible typhoons, a weak currency, and delays in President Rodrigo Duterte's ambitious US$180 billion (S$244 billion) infrastructure programme.

"Farmers will face risks due to weather disturbances. Damage of typhoons Paolo and Ramil might further slow down fishing and agricultural production next year," said Mr Pernia. He added that rising oil prices, and higher electricity and water rates could also dampen consumer spending.

But those could be offset by an uptick in remittances from millions of Filipinos abroad, which could fuel consumer spending as the Christmas holiday season peaks.

The Philippines is among the fastest-growing economies in Asia, expanding more than 6 per cent for nine consecutive quarters.

Industry grew 7.5 per cent, services by 7.1 per cent, and agriculture, 2.5 per cent, reversing declines in the second quarter.

Mr Pernia said growth in the service sector showed that the outsourcing industry - a pillar of the Philippine economy along with remittances - has not slackened. There had been concern that protectionist policies under United States President Donald Trump could lead to a downturn in the industry.

Growth is underpinned in large part by consumer spending, which is fuelled by the outsourcing industry and remittances from overseas Filipino workers.

Consumer spending, which makes up about 70 per cent of gross domestic product, grew 4.5 per cent from a year earlier

Even government spending is growing, by 8.3 per cent, as a result of pay hikes for civil servants, higher allowances for soldiers, and the hiring of more public school teachers.

Asked about the weaker peso, Mr Pernia said it works both ways.

"The weakening will always be beneficial to exports and remittances, as far as spending of remittances by households here is concerned. That's fine," he said.

"But the peso has been strengthening, weakening somewhat, then strengthening again. So it's not really a worrisome development."

A version of this article appeared in the print edition of The Straits Times on November 17, 2017, with the headline 'Philippine economy grows 6.9% in Q3'. Print Edition | Subscribe