The National Economic and Development Authority (NEDA) remains confident that the government can still achieve its full-year growth target despite a slowdown in gross domestic product (GDP) growth in the third quarter of 2024.
In a briefing on Thursday, Nov. 7, the Philippine Statistics Authority (PSA) reported that the local economy grew by just 5.2 percent in the third quarter, a marked decline from the 6.4 percent growth recorded in the second quarter.
This growth rate is the lowest since the second quarter of 2023, which posted a growth rate of 4.3 percent.
As a result, the average GDP growth for the first three quarters of 2024 now stands at 5.8 percent, which is below the government's target of 6.0 percent to 7.0 percent for the year.
"The economy needs to grow by at least 6.5 percent in the last quarter of 2024 to meet the government's target," NEDA Secretary, Arsenio M. Balisacan stated.
Despite the high target growth rate, Balisacan expressed optimism, stating that the goal is still achievable. He anticipates increases in holiday spending, more stable commodity prices due to low inflation, lower interest rates, and a robust labor market.
He also added that recovery efforts in areas affected by typhoons would stimulate economic activity and foster rebuilding efforts.
Balisacan emphasized that compared to other developing countries in the region, the Philippines remains one of the fastest-growing economies in Asia.
He noted that easing inflation has improved both consumer and business sentiment, leading the Bangko Sentral ng Pilipinas (BSP) to cut policy rates by 50 basis points and reduce reserve requirements to enhance liquidity.
"We expect these measures to encourage growth in private spending, particularly on significant consumer items and investments in capital-intensive infrastructure," he added.
Notably, agricultural output dropped by 2.8 percent in the third quarter, attributed to the effects of El Niño and multiple typhoons, which contributed to slower overall production growth.
Additionally, fishing, aquaculture, and livestock production experienced declines due to a fishing ban amid an oil spill, adverse weather conditions, and recent outbreaks of African Swine Fever (ASF).
Although domestic demand grew by 6.6 percent, supported by a 5.1 percent rise in household spending, tourism spending slowed due to weather disruptions. Balisacan noted that there were 138 flight cancellations during the third quarter.
Exports also fell year-on-year, driven by a 17.9 percent decline in electronics, particularly semiconductors, while rising imports led to a 32.6 percent contraction in net exports. Furthermore, public construction growth sharply decreased to 3.7 percent from 21.7 percent due to administrative delays and weather-related disruptions.
"The industry is undergoing inventory corrections and has yet to meet the demands for new products in the global market," Balisacan stated.
To stay on track for medium-term growth, Balisacan highlighted the need to prioritize improving infrastructure projects, enhancing fiscal support, streamlining business processes, and boosting competitiveness to attract investment.
He also said that the government is pursuing new free trade agreements (FTAs), upgrading tourism infrastructure, and focusing on the integration of artificial intelligence (AI), while also addressing job displacement through reskilling initiatives to strengthen the external sector.