Storms, export decline drag Philippine growth to slowest in year
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 in the July-to-September period expanded 5.2 per cent from a year earlier, the statistics agency said on Thursday (Nov 7), trailing the 5.7 per cent median estimate of economists in a Bloomberg survey. That compared to 6.4 per cent 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 per cent, below the goal of President Ferdinand Marcos Jr’s administration to expand the economy by at least 6 per cent in 2024. Quarter on quarter, the economy posted a slightly faster-than-expected 1.7 per cent expansion.
Economic Planning Secretary Arsenio Balisacan said the economy needs to grow by at least 6.5 per cent 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 per cent by 11.03 am, poised for its lowest close in nearly two months. The peso was down 0.1 per cent at 58.745 against the US dollar.
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The Bangko Sentral ng Pilipinas has delivered two quarter-point cuts since August to bring its key interest rate to 6 per cent. 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 per cent of the nation’s output, rose 5.1 per cent while growth in government spending slowed to 5 per cent from 11.9 per cent in the second quarter. Exports declined 1 per cent in the third quarter, after expanding 4.2 per cent 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. Tandon said downside risks to domestic demand have risen and, with the US 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 per cent as typhoons, including Yagi and Gaemi, compounded the rainy weather in the third quarter. Growth in industry and services sectors both slowed to 5 per cent and 6.3 per cent, respectively. BLOOMBERG
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