Economic growth increased more than expected in the third-quarter, fueling optimism that the Philippines is on pace to return to its pre-pandemic levels before President Duterte’s term ends, the National Economic and Development Authority (NEDA) said.
The Philippine Statistics Authority (PSA) reported on Tuesday, Nov. 9, that the economy, as measured by the country's gross domestic product (GDP), grew 7.1 percent in July to September, surpassing the 4.8 percent consensus market forecast.
The third-quarter GDP was also a reversal of last year's 11.6 percent contraction, but slower than the upward revised 12 percent expansion seen in April to June 2021.
On a quarter-on-quarter basis, growth expanded by 3.8 percent in the three-month period ending September, compared with the 1.4 percent decline registered in the second quarter.
Socioeconomic Planning Secretary Karl Kendrick T. Chua said the latest GDP growth indicates sustained recovery despite more than a month of renewed coronavirus restrictions in the country’s economic hubs.
“This is among the highest third-quarter growths in the ASEAN and East Asian region,” Chua told reporters in a virtual briefing.
The strength in economic output was a result of the government’s decision to allow people to continue working and businesses to operate while observing the health protocols amid the recent Delta variant-induced infection surge, Chua said.
The economy's performance in the third quarter brought the country's nine-month GDP growth to 4.9 percent, settling at the upper end of the government’s revised target of 4.0 percent to 5.0 percent for the year.
The economy should grow at least 5.3 percent in the fourth quarter to meet the higher end of the government’s full-year growth goal.
But despite the better than expected economic pickup, the real GDP as of September 2021 was still 5.7 percent short of returning to its pre-pandemic level, data from the PSA showed.
Chua, however, expects sustained recovery in the coming months would bring country’s economy back to pre-pandemic levels of activity by the first quarter of 2022, or around three months before the end of President Duterte’s term.
“In the remaining eight months of the Duterte administration, our top priority will be laying the foundation for a COVID-19 resilient society that can live with the virus. We will return to the path of rapid and more inclusive growth,” Chua said.
On the production side, the industry sector expanded by 7.9 percent, while the services sector grew by 8.2 percent. In contrast, agriculture declined by 1.7 percent.
On the expenditure side, growth was primarily driven by household consumption, which grew by 7.1 percent and accounted for 5.2 percentage points of overall GDP growth.
“This strong rebound points to improving consumer confidence. We expect this to be sustained in the fourth quarter given more relaxed restrictions and a higher vaccination rate,” Chua said.
Moreover, government expenditure returned to a positive growth trend at 13.6 percent, reversing its contraction in the previous quarter.
In addition, total investments increased by 22 percent, driven by public and private construction that grew by 55.3 percent and 12.2 percent, respectively.
“The government’s decision to allow all construction activities to resume regardless of the area’s quarantine status must be credited for this,” Chua said.
External trade grew as well. Exports increased 9.0 percent while imports rose 13.2 percent.
“The high growth of imports reflects the strong recovery of consumption and investment spending. The moderate growth of exports reflects both the global recovery as well as global logistics issues,” the NEDA chief said.