GDP growth slows to 6.5% in Q3 after election splurge

MANILA, Philippines (UPDATE) – The local economy expanded by 6.5% in the third quarter from a year ago, below market expectations and slower than the growth in the first half, data from the economic planning agency showed.

Gross domestic product (GDP) growth for the July to September period was below the revised 8.2% and 7.8% jumps recorded in the second and first quarters, respectively. It was also lower than the 6.8% estimate in a previous Reuters poll of economists.

The third-quarter figure brought the average GDP growth for the first 9 months to 7.5%, well above the full-year government target of 5% to 6%.

Meanwhile, GDP contracted by a seasonally adjusted 0.5% in the third quarter.

The National Economic Development Authority (NEDA) said third-quarter economic growth was expected to lose some strength as effects of government pump-priming and election spending faded.

Despite this, NEDA chief Cayetano Paderanga expects the economy could exceed the 2010 forecast this year.

The Bangko Sentral ng Pilipinas (BSP) said it may keep its policy rate steady at a record low of 4% even with sustained economic growth.

Interest rates have remained unchanged for the 12th straight central bank policy meeting on November 18, and these are likely to stay the same going into 2011 due to benign inflation outlook.

The Philippines is one of few Asian countries not to have raised interest rates yet since the global financial crisis. – With a report from Reuters