Philippine economy slows more than expected in Q3, annual growth target in doubt
MANILA: The Philippine economy slowed for a fifth straight quarter in the July-September period, weighed down by weaker household and government spending and a contraction in agriculture, putting the country on course to miss its growth target for the year.
The Philippine economy contracted for the fifth consecutive quarter in the July-September period, according to data released. This slowdown is attributed to weaker household and government spending, as well as a contraction in agriculture, which has put the country at risk of missing its growth target for the year. The Philippine economy expanded by 2.1 percent in the third quarter, a slowdown from the previous quarter's upwardly revised 2.4 percent growth.
This marks the weakest pace in over five years. A Reuters poll had predicted growth at 3 percent. On a more granular basis, the economy grew by 0.1 percent quarter-over-quarter, down from 0.6 percent in the previous quarter. Economic Planning Secretary Arsenio Balisacan stated that to achieve the government's lower end of its growth target, which is between 3.5 percent and 4.5 percent for the year, the economy would need to grow by 6.3 percent in the fourth quarter.
Achieving such growth will be challenging, given that elevated inflation is likely to further dampen household demand, a key driver of the Philippine economy. Annual inflation spiked to a three-year high of 7.8 percent in October, and Balisacan said consumer prices are expected to stay elevated due to higher food and fuel costs.
Household spending contracted for a fourth consecutive quarter in July-September, clocking in at 2.4 percent. Similarly, government consumption eased to 6.8 percent from 8.3 percent in the previous quarter. The agricultural sector also contributed to the economy's lackluster performance, with farm output contracting by 4.8 percent in the third quarter, reversing growth of 2.9 percent in the June quarter.
Balisacan maintained that the government's 5 to 6 percent growth target for the next year is still achievable, but it will require strong investment, easing price pressures, and a recovery in business confidence, which has been hampered by a corruption scandal involving flood control projects. The Bangko Sentral ng Pilipinas has already raised interest rates by a total of 125 basis points since April, including last month's larger-than-expected 50-basis-point hike, to combat inflation. This increase in borrowing costs adds another hurdle for growth.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
