Philippines Growth Rebounds to 6.2% on Public Spending Surge

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The Philippine economy grew at a faster pace than economists forecast in the third quarter as the government overcame its spending bottlenecks.

Gross domestic product expanded 6.2% from a year earlier, higher than the 6% median estimate in a Bloomberg survey of economists. Growth quickened from 5.5% in the second quarter, when budget delays put a brake on government spending.

Key Insights

• Government spending surged 9.6% in the third quarter from a year ago following approval of the budget in April. Economic Planning Secretary Ernesto Pernia told reporters Thursday the government will speed up projects that were postponed as a result of the budget delay
• The economy must expand 6.7% in the fourth quarter for the government to meet the low end of its 6%-7% goal for the year, he said
• Construction surged 16.3% in the third quarter from a year ago; agriculture and fishing rose 3.1% and finance climbed 10%. For a sectoral breakdown of GDP, click here
• Private consumption growth accelerated to 5.9%, while investment contracted for a second quarter, by 2.1%. Click here for more
• Economists said last quarter’s rebound increases the chance of growth of about 6% this year. “Growth back to the 6% handle, gives hope to chase full year growth of 6% alive, but will likely be a close call,” said Nicholas Mapa, a senior economist at ING Groep NV in Manila. “Silver lining is that government spending is back online and in a big way.”

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• GDP rose a seasonally adjusted 1.6% in the third quarter from the previous three months, lower than the 1.8% median estimate in a Bloomberg survey of economists
• Central bank Governor Benjamin Diokno has signaled no further monetary policy easing this year, saying it’s done “more than enough” to support the economy after 75 basis-points of rate cuts and reductions in the reserve ratio

What Bloomberg’s Economists Say

“Though the pickup in GDP growth brightens the outlook for the Philippine economy, growth remains below its potential. That should give Bangko Sentral ng Pilipinas space to continue its easing cycle at the start of 2020.”

Justin Jimenez, Asia economist

• The peso gained 0.1% to 50.55 per dollar at 10:25 a.m. in Manila, while the benchmark stock index climbed as much as 0.7% before trading 0.3% higher

--With assistance from Tomoko Sato, Siegfrid Alegado and Ditas Lopez.

To contact the reporters on this story: Claire Jiao in Manila at cjiao5@bloomberg.net;Cecilia Yap in Manila at cyap19@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Clarissa Batino

©2019 Bloomberg L.P.