By Chino S. Leyco
The Department of Finance (DOF) said yesterday that the Philippine economy is becoming more investment-driving, noting this should sustain the country’s rapid expansion pace in the medium-term.
Despite the slower gross domestic product (GDP) in the third-quarter, Finance Undersecretary Gil S. Beltran, believes the 6.1 percent economic growth is still “robust.”
Beltran said that investment boosted the growth after its share to GDP rose to a record 26 percent in the first nine-months of the year from 23.6 percent in the same period in 2017. “This will sustain rapid economic growth over the medium-term,” Beltran said in his latest economic bulletin submitted to Finance Secretary Carlos G. Dominguez III.
Investment also posted a double-digit growth at 16.7 percent, while construction jumped by 16.1 percent due to public construction’s 25.4 percent increase and private construction’s 12.1 percent.
Beltran also said that steady services sector, which grew by 6.9 percent, due to public administration, defense, financial intermediation, and other services, supported the country’s growth this year.
The finance official, likewise, cited that exports grew 14.3 percent, despite global uncertainties, as another reason for the above six percent GDP.
Beltran, meanwhile, said that agriculture and manufacturing dragged down the country’s economic expansion.
In the third-quarter, agriculture contracted by 0.4 percent, while food manufacturing slowed to 2.6 percent from five percent, chemicals declined 4.6 percent, and tobacco and alcoholic beverages fell 21.4 percent due to higher taxes.
“It [growth] was also adversely affected by rising inflation dragging down household consumption with declines in consumption of food and nonalcoholic beverages, tobacco and alcoholic beverages, and transport,” Beltran said.
“The latter was due to the rise in the price of petroleum in the world market due to Iran sanctions,” he added.
To avert economic slowdown and sustain rapid growth, Beltran said the government should sustain its fiscal space through the passage of remaining tax reforms to maintain investment growth.
He also said the government should work on dampening inflationary pressures through supply-boosting measures as well as implement agriculture productivity programs.
The government should also open imports of agriculture inputs for manufacturing, the finance official said.
On Thursday, The Philippine Statistic Authority (PSA) reported Philippine economic growth slightly weakened in the third-quarter amid skyrocketing commodity prices that were partially fuelled by the contraction of the agriculture sector during the three-month period.
But despite the slower economic expansion, Socioeconomic Secretary Ernesto M. Pernia believes the third-quarter GDP is a “respectable” performance, citing it is the 14th consecutive quarter where the country grew above 6.0 percent.