By Beatrice M. Laforga

THE PHILIPPINE ECONOMY stands a fair chance of hitting the lower end of the government’s 6-7% gross domestic product (GDP) growth target for this year, if it were to hit the middle of Socioeconomic Planning Secretary Ernesto M. Pernia’s projection for this quarter.

Citing faster household consumption — which has lately been contributing nearly 70% of GDP — as Christmas approaches and the boost from easing inflation, Mr. Pernia gave a 6.5-7% projection when reporters pressed him on Thursday for a fourth-quarter economic growth estimate.

That would compare to the 5.6%, 5.5% and 6.2% growth rates recorded in the first to the third quarters of this year and the 6.3% logged in last year’s final three months.

The lower end of Mr. Pernia’s fourth-quarter growth estimate would match the rate recorded in last year’s first quarter and would be the fastest since the 6.6% recorded in 2017’s final three months.

With the nine months to September seeing 5.8% average GDP growth, Mr. Pernia had said that the economy needs to expand by at least 6.7% this quarter to hit the floor of the government’s 2019 growth target.

National Statistician Claire Dennis S. Mapa told reporters separately that this can be attained as the holiday season will further boost household consumption.

Household final consumption growth picked up to 5.9% from 5.5% in the preceding quarter and 5.3% the past year. The fourth quarter last year saw this growth expenditure segment sustain a 5.3% clip.

With the outbreak of the African Swine Fever (ASF), Mr. Mapa said hog production may decelerate this quarter.

Hog output growth, which accounted for 15.74% of total farm production last quarter, edged up 1.96% in July-September and by 2.54% year-to-date.

“Hogs [output] is relatively slower compared to the second quarter,” Mr. Mapa noted.

“But in the fourth quarter baka mag-negative (production might be negative), while the other livestock [will] compensate like chicken, increasing to near double-digit,” he explained.

Production of pork substitute chicken, which accounted for 14.72% of total farm output, increased by 8.48% last quarter and 5.25% year-to-date. Mr. Mapa said the increase in prices of this commodity could still pick up as even more consumers shun pork for substitutes during feasts in the upcoming holidays.

While saying that he needed more data to give a GDP growth estimate for 2019’s final three months, Finance Undersecretary Gil S. Beltran, who is the department’s chief economist, said that if currently available numbers were to be the sole basis, the “fourth quarter would be the best quarter of all.”

Michael L. Ricafort, economist at Rizal Commercial Banking Corp. (RCBC) said 6.7% GDP growth in the fourth quarter would be “possible to achieve” if the surge in state spending in September, especially on infrastructure, was sustained.

Government spending, which contributes nearly a 10th of GDP, recovered to grow 9.6% from 7.4% and 7.3% in the first and second quarters, respectively, though still slower than the 14.3% reported in 2018’s third quarter. Growth of this expenditure segment slowed to 12.6% in 2019’s final three months.

In September alone, state spending surged 39.01% to P415.1 billion from the P298.6 billion a year earlier, bringing the year-to-date expenditures to P2.627 trillion.

Robust consumer spending will likely be sustained as inflation could settle below the central bank’s 2-4% target range for this year, according to Nicholas Antonio T. Mapa, a senior economist at ING Bank N.V. Manila Branch.

However, ING’s Mr. Mapa warned that capital formation will be the “missing link” for the overall economic growth.

“Had capital formation remained in positive territory, overall PHL GDP may have easily cleared the six percent handle. But with the sector posting twin contractions [of -8.5% and -2.1% in the second and third quarters, respectively], growth has been held back,” he said in a note to journalists on Friday.

“Another major growth driver includes any pickup in investments or capital formation, especially if loan growth picks up from among the slowest levels in nearly nine years as local interest rates may have already bottomed out in August 2019 that could encourage borrowers to be more aggressive in their borrowings or financing requirements,” RCBC’s Mr. Ricafort said in a mobile phone message on Sunday.