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Q3 surprise as GDP growth tops forecasts

The economy grew by a better-than-expected 7.6 percent in the third quarter, the Philippine Statistics Authority (PSA) reported on Thursday, all but assuring that this year's growth goal will be met.



Graphic: Business World


The result was an improvement from the second quarter's upwardly revised 7.5 percent and defied analysts' forecasts of a slowdown to around 6.0 percent.


Year to date, average gross domestic product growth (GDP) currently stands at 7.8 percent, above the government's downwardly revised 6.5- to 7.5-percent goal for 2022.


The economy only needs to grow by 3.3 to 6.9 percent in the last three months of the year for the target to be hit, Socioeconomic Planning Secretary Arsenio Balisacan said.


Balisacan, however, warned that "while these developments are remarkable, I want to underscore that our nation still faces a considerable burden in the form of high inflation due to heightened external risks and the brunt of recent typhoons."


"[T]he economy could have grown further if not for the inflation" that accelerated to near 14-year high of 7.7 percent in October, he added.


All major economic sectors posted gains during the period, with agriculture, forestry and fishing up 2.2 percent, industry gaining 5.8 percent and services improving by 9.1 percent.


Broken down, services accounted for 5.8 percentage points of the quarter's 7.6-percent growth, followed by industry at 1.6 percentage points and 0.2 for agriculture, fishery and forestry.


On the demand side, household consumption grew by 8.0 percent, which Balisacan said "signifies that Filipino families are close to returning to pre-pandemic life, as more people visit restaurants and hotels, and engage in recreational activities within the country."


Budget Secretary Amenah Pangandaman, in a statement, said the "7.6-percent growth shows that socioeconomic objectives can be achieved amid a high inflationary environment, tightening monetary policy stance and even the depreciating peso against the US dollar."

Analysts upbeat


Commenting on the results, China Banking Corp. chief economist Domini Velasquez said the "upside surprise cements the outlook that the government will be able to reach its full-year target."


"It also provides more for wiggle room for the BSP (Bangko Sentral ng Pilipinas) to raise rates by at least 6 percent without slowing growth too much," she said.


"A jump in private sector spending and investment also relieves pressure from the government to spend. Instead, government spending can take a backseat and carry on with fiscal consolidation."


Similarly, Nicholas Antonio Mapa, senior economist at ING Bank Manila, said the government could "easily" attain its growth target for the year.


"With the holidays fast approaching, we can expect growth momentum to remain intact with household spending likely supporting overall economic activity for the first holiday sans mobility restrictions," he added.


"We expect growth to settle close to the upper end of the national government target for 2022, although 2023 growth could be challenged should current headwinds persist," Mapa continued.


"With growth resilient, we expect the Bangko Sentral ng Pilipinas to remain hawkish with the central bank likely pushing the policy rate to 5.5 percent by year-end."


Source: Manila Times

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