Third-quarter 2019 GDP growth scaled down

By Carmina Angelica V. Olano
Researcher

THE PHILIPPINE ECONOMY in the third quarter grew at a slower pace than previously reported, the Philippine Statistics Authority (PSA) said a day before it announces preliminary figures for the fourth quarter and full-year 2019.

Gross domestic product (GDP) — the value of all finished goods and services produced in the country — expanded by six percent in the July-September period, slower than the preliminary 6.2%, the PSA said yesterday.

This brought 2019’s first three quarters’ pace to 5.7% from 5.8% initially, against the government’s revised 6%-6.5% target for the year.

In a mobile phone message, Socioeconomic Planning Secretary Ernesto M. Pernia said he remains hopeful in achieving the 6%-6.5% growth target for 2019 despite the downward revision.

Meanwhile, ING Bank NV-Manila Senior Economist Nicholas Antonio T. Mapa said in a note to reporters the recent revision dimmed hopes for full-year growth to reach six percent in 2019.

“The streak of years above six percent is currently [at seven] and the fourth-quarter GDP will need to crest 6.8% to pole vault to a six-percent finish and complete the tale of two halves,” he said.

The services sector grew by 6.7% in the third quarter, down from the initially reported 6.9%. Sub-sectors that saw downward revisions were transport, storage and communication (8.2% from 9.1%); trade and repair of motor vehicles, motorcycles, personal and household goods (7.8% from 8.1%); real estate, renting and business activities (4.1% from 4.2%); and other services (4.2% from 5.1%).

On the other hand, financial intermediation increased to 11.2% from 10%.

Agriculture, hunting, forestry and fishing saw a marginal downward revision of 3.05% growth from 3.08%.

Likewise, growth in the industry sector was revised lower by 0.03 percentage point in the third quarter to 5.6% from 5.63%. Contributing to the decline was construction, whose third-quarter growth was revised to 15.4% from 16.3%.

Manufacturing growth was revised upwards to 2.6% from the initial estimate of 2.4%.

Mining and quarrying recorded a smaller contraction at 3.2% from the previous 4.9% slump.

On the expenditure side, downward revisions were made in capital formation (-2.6% from -2.1%) and imports of goods and services (-0.2% from -0.02%).

Meanwhile, higher estimates were noted in household spending (5.95% from 5.91%), and exports of goods and services (0.7% from 0.2%).

Government spending was kept steady at 9.6% growth.

“The ill effects of the BSP’s (Bangko Sentral ng Pilipinas) 2018 rate hike cycle continue to feed through the economy with the latest revision to third-quarter GDP showing a more substantial pullback in investment activity,” ING’s Mr. Mapa said.

“The continued sluggish growth momentum will definitely move the BSP to ease policy rates again in February with the ill effects of the aggressive 2018 tightening phase still being felt in the third quarter of 2019. The recent volcanic eruption and the impending disruption in economic activity from the damage will likely weigh on the recovery momentum further with both fiscal and monetary policy called upon to bolster the economy amidst the higher growth pitch of 6.5-7.5% [for 2020-2022],” he added.

Meanwhile, the ASEAN+3 Macroeconomic Research Office maintained the forecast it gave for the Philippines in October at six percent growth for 2019, according to the January update of its ASEAN+3 Regional Economic Outlook 2020.

Insular Life Assurance Co. Ltd. said in its latest economic outlook on Wednesday that last year’s GDP might have expanded at 5.9%.

Aside from GDP, the PSA revised upwards the gross national income (GNI) in the third quarter to 5.7% from 5.6% previously. The GNI is the sum of the nation’s GDP and net income received from overseas.

The third-quarter 2019 revision comes ahead of today’s release of the preliminary estimate for fourth-quarter and full-year GDP.

A BusinessWorld poll of 20 economists yielded a median GDP growth estimate of 6.4% for the fourth quarter and 5.9% for full-year 2019. — with inputs from Beatrice M. Laforga