2019.11.0702:52:00UTC+00Philippine GDP Growth Accelerates On Govt Spending

The Philippine economy logged a faster-than-expected growth in the third quarter driven by government spending, data from the Philippine Statistics Authority revealed Thursday.

Gross domestic product grew 6.2 percent year-on-year, faster than the 5.5 percent expansion in the second quarter and the expected pace of 6 percent. This was the fastest growth seen this year.

On a quarterly basis, the economy expanded 1.6 percent in the third quarter.

Economic Planning Secretary Ernesto Pernia said the economy needs to grow 6.7 percent in the fourth quarter to achieve the government's full year target of 6-7 percent growth.

The production-side showed that the service sector logged the fastest growth in the third quarter, up 6.9 percent. At the same time, industry and farm sectors advanced 5.6 percent and 3.1 percent, respectively.

On the expenditure side, government expenditure surged 9.6 percent and household spending grew 5.9 percent. Meanwhile, gross fixed capital formation fell 2.1 percent. Exports rose 0.2 percent, while imports remained flat in the third quarter. The jump in growth will probably edge up again next quarter but this is unlikely to mark the start of a sustained rebound in growth, Alex Holmes, an economist at Capital Economics, said.

The economy is expected to grow 6 percent next year, which would be well short of the government's target of 6.5-7.5 percent, Holmes noted.

Nonetheless, he said consumption should continue to grow at a decent rate and recent monetary policy loosening should provide a boost to the economy.