The Philippine economy grew 7.1% in the third quarter of 2016, beating market expectations and making the country the fastest growing among major Asian peers.
National Economic and Development Authority (NEDA) Undersecretary for Policy and Planning Rosemarie Edillon in a statement said this growth cements the country’s chance of achieving the target of 6% to 7% gross domestic product (GDP) for the whole of 2016.
For the fourth quarter, the country only needs at least 3.4% growth to attain the low-end target of 6%. To reach the high-end target of 7%, Edillon said growth of 6.9% needs to be set in the last quarter.
The Philippines is the fastest growing among major Asian emerging economies to release data for the quarter. The country’s rate is higher than China’s 6.7%, Vietnam’s 6.4%, Indonesia’s 5%, and Malaysia’s 4.3%.
From the demand side, Edillon said investments continue to drive economic growth, “indicating its sustainability.” Investments in durable equipment remain strong. Private sector investments in construction grew significantly by 16.2% while public investment in infrastructure remains strong, with public construction expanding by over 20%. Household consumption is still a pillar of strength for the domestic economy. The higher private consumption is supported by low inflation, low interest rates, better labor market conditions, and the steady though slower growth of overseas Filipinos’ personal remittances.
“From the supply or production side, we are happy to note the recovery signs of agriculture, which is one of the major development priorities of this administration,” Edillon noted.
With improving weather conditions, the NEDA official said agriculture grew 2.9%, breaking five consecutive quarters of decline. It has recovered from the prolonged drought brought by the El Niño phenomenon, which dissipated in the third quarter of 2016.
Industry growth further improved to 8.6%, growth in manufacturing and construction was also stronger, while utilities was broadly steady. However, Edillon said services growth eased to 6.9% from last quarter and a year ago. “Services saw slower, though still reasonable, growth,” she noted.
Public administration, though expanding by 3.7%, slowed down compared to the previous quarters due to the waning effects of election spending.
“All things considered, our economy’s strong growth in the third quarter is a very good sign of things to come,” Edillon pointed out.
Together with a low inflation environment, she said a sustained strong growth bodes well for continued poverty reduction this year.
“The services sector and the sustained strong fiscal spending will also likely continue to drive growth in the fourth quarter. Robust domestic demand will continue to bolster growth in the near term,” she added.
Agriculture and fisheries is also seen to continue to grow within the near term if the third-quarter momentum of the crops, livestock and poultry subsectors is maintained. Edillon, however, noted that while agriculture has recovered somewhat, “we still have a long way to go for this sector.”
The manufacturing sector, meanwhile, is expected to benefit from the strategic localization of industry roadmaps and robust domestic demand. “It will also benefit from the projected rise of imports of both advanced economies and emerging market and developing economies beginning 2017. Construction also will remain a major contributor to growth due to the strong commitment of the government to implement a massive infrastructure investment program,” Edillon said.
She said, however, that the government is still on guard for possible downside risks to the economy.
“We are hopeful that the trajectory of our country’s growth will remain high in the face of the challenges ahead of us. The government and the private sector have to take every opportunity that this growth brings to improve the lives of our countrymen, especially to eliminate poverty and create quality jobs and entrepreneurial opportunities,” the NEDA official stated.
