PH economic growth falls sharply in 3Q

PHILIPPINE economic growth fell sharply in the third quarter because of an export slowdown and the delayed implementation of the government’s public-private partnership scheme.

The National Statistical Coordination Board (NSCB) on Monday said the country’s gross domestic product growth slowed for the third consecutive quarter to 3.2 percent from the 7.3 percent “honey moon” growth last year.

The third quarter GDP figure is lower than the 3.8 percent to 4.8 percent forecast of the National Economic and Development Authority.

The NSCB also revised the second-quarter growth to 3.1 percent, down from an earlier estimate of 3.4 percent.

This brought economic growth to 3.6 percent in the first three quarters of 2011, sharply down from 8.2 percent in the same period last year.

The year-to-date figure also fell below the low-end of the government’s revised full-year target of 4.5 percent to 5.5 percent.

“The so-called death spiral of debt that hounds our trading partners, the uninvigorating, albeit already expanded government spending, and the decline in fishing due to unfavorable weather and the high cost of fuel contributed to this relatively lethargic growth,” NSCB said.

It said the services sector “saved” the domestic economy from posting an even lower growth.

The services sector grew by 4.3 percent in the third quarter, while agriculture slowed to 1.8 percent. Industry contracted 0.2 percent.

The NSCB said consumer spending, which expanded by 7.1 percent, bolstered the economy, but construction continued to suffer from the much delayed implementation of the PPP program.

Construction fell by 12.2 percent in the third quarter, reversing a growth of 15.6 percent last year.

Socioeconomic Planning Secretary Cayetano Paderanga blamed the weak economic growth on the typhoons that cut agriculture sector output, as well as on the global economic slowdown brought about by uncertainties in Europe and weakness of the US economy.

The NSCB said Philippine GDP may have grown 3.5 percent in the third quarter if Typhoon Pedring had not happened.

Paderanga admitted the stricter project reviews led to the contraction of the construction sector.

“The services sector however continued to perform strongly on the back of sustained OFW remittances, relatively more favorable inflation environment, and increased pace in government expenditures, as the services sector saw strong performances by the transportation, communication and storage; real estate, renting and business; public administration and defense; and education, tourism, and other services subsectors,” he said.

The Philippines’ third quarter economic performance was weaker than Indonesia’s 6.5 percent, Vietnam’s 6.1 percent, Singapore’s 6.1 percent, Malaysia’s 5.8 percent, and Thailand’s 3.5 percent.

“Notwithstanding the third quarter’s moderate growth, there are indications of more favorable prospects for the fourth quarter of 2011. These include the anticipated higher demand on account of the Yuletide and harvest seasons; a more stable macroeconomy; a broadly steady consumer sentiment; the continued inflows of remittances from Filipinos overseas; the reported higher level of business confidence relative to the previous quarter; and the full implementation of the P72 billion disbursement acceleration program of the government,” Paderanga said.

The NSCB said the economy needs to grow 6.9 percent in the fourth quarter to achieve the 4.5 percent low-end target this year. To meet the 5.5 percent high-end target this year, the economy needs to grow by 10.6 percent in the fourth quarter.

With the economy decelerating for the third consecutive quarter, Philippine GDP appears to be heading to another downgrade—plausibly a growth of between 3.3 percent and 3.9 percent, Benjamin Diokno, economics professor at the University of the Philippines said.

Bangko Sentral ng Pilipinas Gov. Amando Tetangco Jr. said the last GDP numbers would figure in the Monetary Board’s meeting on Thursday, its last for the year.

“Together with data on potential price pressures and other related domestic and external indicators, data on GDP will serve as inputs to the assessment of monetary policy. We will consider recent data releases and forecasts of economic activity and prices, including the balance of risks surrounding such, consistent with the forward looking stance of monetary policy,” he said. –Darwin G. Amojelar Senior Reporter
with report from Lailany P. Gomez, Manila Times