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The economic growth of the Philippines quickened to 5.9 percent in the third quarter of 2023 from 4.3 percent in the second quarter despite the external headwinds, according to the Philippine Statistics Authority (PSA).
“The year-on-year 5.9 percent GDP growth in the third quarter of 2023 is a marked improvement from the 4.3 percent growth in the second quarter. This performance makes our economy the fastest among the major emerging economies in Asia that have released their third-quarter 2023 GDP growth: Vietnam at 5.3 percent, Indonesia and China at 4.9 percent, and Malaysia at 3.3 percent,” said National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan.
“This brings the average in the first three quarters to 5.5 percent. The economy needs to grow by 7.2 percent in the fourth quarter to attain the low end of the target range,” Balisacan said.
The July-to-September performance nearly hit the low end of the 2023 gross domestic product (GDP) growth target range of 6 percent to 7 percent but was slower than 7.7 percent registered in the same period last year.
National statistician and civil registrar general Dennis Mapa said that agriculture, forestry and fishing; industry; and services all posted positive growths in the third quarter, with 0.9 percent, 5.5 percent and 6.8 percent, respectively.
Data showed that on the expenditure or demand side of the economy, domestic demand—the sum of household final consumption spending, government final consumption expenditure, and gross capital formation or investment—improved to 3.9 percent in the third quarter from 2.2 percent in the second quarter.
External demand or net exports, on the other hand, increased by 12.9 percent in the third quarter, up from 8.5 percent in the second quarter of 2023.
Household consumption growth slowed down year-on-year to 5.0 percent in the third quarter of 2023 from 5.5 percent in the previous quarter as food inflation increased to 8.2 percent in the third quarter from 7.4 percent in the second quarter of 2023. The seasonally adjusted quarter-on-quarter growth of household consumption was solid at 4.8 percent.
Gross capital formation declined year-on-year by 1.6 percent, largely due to the substantial drawdown in inventories and the slowdown in durable equipment - 1.7 percent from 10.5 percent in Q2 2023. These outweighed the faster growth in both public construction which grew by26.9 percent from 0.7 percent and private construction which grew by 5.1 percent from 4.3 percent.
The acceleration of public spending in the third quarter is notable, tempering the decline of overall gross capital formation. Year-on-year growth of Government Final Consumption Expenditure rose to 6.7 percent in the third quarter from negative 0.7 percent in the second quarter. Similarly, Government Fixed Capital Formation growth increased to 26.9 percent in the third quarter from 0.7 percent in the second quarter. Overall, government spending contributed 2.1 percentage points or 36 percent of the observed 5.9 percent GDP growth.
He said while inflation recently eased to 4.9 percent in October 2023 from 6.1 percent in September 2023, the government would continue to prioritize strategies in response to the potential impacts of El Niño, which is projected to intensify in the coming months until early 2024.
“Moving forward, we will continue to leverage the full implementation of liberalization reforms to intensify investment promotion in the country and boost growth, thereby generating higher-quality employment opportunities for our growing labor force. We thank Congress for passing the consolidated version of the Public-Private Partnership Act. Once signed into law by the President, which we expect to happen within the year, this legislation will promote greater private sector participation in the country's infrastructure development,” he said.
“We would like to assure all Filipinos that we will make every effort to remain on course in attaining the economic and social transformation targets of the Philippine Development Plan 2023-2028 and achieve a matatag, maginhawa, at panatag na buhay para sa lahat,” he said.