GDP growth rebounds in Q3 as gov't revs up spending

ABS-CBN News and Reuters

Posted at Nov 07 2019 10:03 AM | Updated as of Nov 07 2019 10:42 AM

President Rodrigo Duterte drives through the Candon City Bypass Road in Ilocos Sur on July 25, 2019. With the President are Senator Christopher Lawrence "Bong" Go and Public Works and Highways Secretary Mark Villar. Economic growth rebounded in the third quarter as government ramped up spending. Simeon Celi Jr., Presidential Photo

MANILA -- (UPDATE) Economic growth rebounded in the third quarter, as government accelerated spending that was held back by the delayed passage of this year's national budget.

Gross domestic product grew 6.2 percent in the July to September period, breaking two successive quarters of slowdown and beating the 6 percent median forecast of economists in separate polls by Bloomberg and Reuters.

The third quarter expansion places the Philippines ahead of China, India and Indonesia and behind Vietnam, which leads Asian economies in terms of GDP growth.

"We have seen the economy surging and the momentum will continue," Socioeconomic Planning Secretary Ernesto Pernia said.

Pernia said the new list of flagship infrastructure projects was approved during a Cabinet meeting late Wednesday. He said the full-year GDP growth goal of 6 to 7 percent would be met.

"Homestretch spending is like a runner, who exerts its utmost effort to reach the end line. We expect it to be in that vicinity if not higher," he said.

A rebound in agriculture and services helped buoy growth in the third quarter, data from the Philippine Statistics Authority showed.

"This plus strong peso and low inflation are signals investors want to see," BDO Capital President Ed Francisco told ABS-CBN News.

Efforts by the government to catch up with its spending appeared to be paying off with expenditures up 39 percent in September from last year.

The GDP growth rebound gives the Bangko Sentral ng Pilipinas scope to pause from cutting interest rates, after a cumulative 75-basis point reduction this year.

Governor Benjamin Diokno said there would be no more reductions to the benchmark lending rate and the reserve requirement ratio for banks for the rest of the year.

Inflation also eased to a 3-year low of 0.8 percent in October as government measures to tame commodity prices, especially rice, kicked in.

Risks to the Philippines' growth outlook remain given the prospect of a global economic slowdown spawned by US-China trade tensions.

Exports growth weakened to 0.6 percent in August from last year, the slowest pace in five months and receding from 3.5 percent in July.

Authorities have expressed confidence that the lower end of this year's 6 percent to 7 percent economic growth target will be met, with a rebound expected in the second half on increased government spending, moderating inflation and easier monetary policy.