By Anna Leah Gonzales | Philippine News Agency
The Philippines remains one of the fastest growing economies in the region despite the slowdown in the third quarter of the year, National Economic and Development Authority (NEDA) Sec. Arsenio Balisacan said on Thursday.
Philippine economic growth settled at 5.2% in the third quarter, lower than the 6% recorded in the same period last year.
The latest data brought the year-to-date gross domestic product (GDP) expansion to 5.8%, slightly under the 6-percent lower end of the government’s growth target for this year.
“Our economy continues to grow steadily; the latest GDP figures indicate continuous expansion. Of the countries that have reported their third-quarter GDP growth rates, we remain one of the fastest-growing Asian economies,” Balisacan said in a briefing at the Philippine Statistics Authority (PSA) office in Quezon City.
“We follow Vietnam, which posted a 7.4% growth rate, and are ahead of Indonesia (with 4.9%), China (4.6%), and Singapore (4.1%), ” he added.
Among the major economic sectors, industry and services grew by 5% and 6.3% in the third quarter.
However, National Statistician Usec. Dennis Mapa said that the agriculture, forestry, and fishing sector contracted by 2.8%.
Balisacan explained that the contraction in the agriculture sector was due to the effects of El Niño, seven typhoons, and the habagat.
He added the fishing ban in Cavite and Bataan due to the oil spill and the cancellation of fishing trips due to bad weather conditions, have also affected fishing and aquaculture.
“Likewise, livestock production decreased due to the recent outbreaks of African swine fever (ASF) such as in Batangas last August,” he said.
Balisacan said the successive typhoons also suspended classes and work in government and some private offices, resulting in administrative delays.
Household final consumption expenditure grew by 5.1%, which Balisacan attributed to the slower consumer price inflation.
Government final consumption expenditure slowed to 5% from 6.7%.
“I think the climate-related disruption, disturbances that happened in the last quarter, could have slowed down the spending. And that’s even more so for those that are related to infrastructure,” Balisacan said.
Gross capital formation recorded a double-digit growth rate of 13.1%.
Imports of goods and services went up by 6.4% but exports of goods and services declined by 1%.
Target still attainable
Balisacan said that despite the slowdown, the government is optimistic that the growth target for this year will still be attained.
“The economy needs to grow by at least 6.5% to meet the government’s target for the last quarter [of] 2024. We remain optimistic that this growth target is attainable, ” he said.
“We anticipate increases in holiday spending, more stable commodity prices (given low inflation), lower interest rates, and a robust labor market.”
Balisacan said recovery efforts in areas affected by typhoons will help drive economic activity.
He said government agencies are assisting to accelerate the recovery of typhoon-affected areas.
The Department of Agriculture provided P541 million in agricultural inputs to the affected areas and allocated P500 million to the Survival and Recovery (SURE) Assistance Program.
The Department of Human Settlements and Urban Development also provided cash and housing materials to assist in the rebuilding of damaged housing units.
Aside from these, the Bangko Sentral ng Pilipinas’ move to cut policy rates by 50 basis points and the reduction in reserve requirements, will help spur private spending growth.
For food security, Balisacan said the Department of Agriculture will accelerate the rollout of its ASF vaccination program, implement stricter biosecurity measures, and increase indemnification for affected hog farmers.
Since two to eight tropical cyclones are expected until April 2025, Balisacan said ensuring the safety of Filipinos remains the government’s priority.
“As directed by the President, we must improve the efficiency and effectiveness of our disaster preparedness and response. National and local government units, in partnership with the private sector, will immediately work on rebuilding and restoring damaged public infrastructure, including electric and telecommunication lines, as well as major thoroughfares such as airports and seaports to ensure immediate resumption of economic activities, particularly in major tourist areas,” Balisacan said.
Medium-term growth
Moving forward, Balisacan said the government will continue to push for the sustained implementation of infrastructure drive, provide fiscal support to flagship projects, and ensure the timely rollout of public and private investments.
“In this regard, it is imperative that we intensify our efforts to improve the ease of doing business and elevate our competitiveness to further strengthen investor interest and confidence,” he said.
Balisacan said the government will also continue to engage in new free trade agreements (FTAs) to strengthen exports.
“The Philippines has resumed its FTA negotiations with the United Arab Emirates and the European Union to expand market access for our non-traditional products, such as halal-related commodities, and services trade, like finance, IT-BPM (information technology and business process management), and engineering, among others,” he said.
Balisacan also cited the need to upgrade the country’s infrastructure and services and improve the transport networks across tourist areas to lower the cost of traveling.
“To sustain services sector growth, we must keep up with technological developments, like artificial intelligence (AI). While we expect significant job generation, there may still be job displacements,” he added.
“We will address this by collaborating with industry and the academe for reskilling, upskilling, and life-long learning programs to increase the workforce’s complementarity with AI. The full implementation of the Digital Workforce Competitiveness Act and the National AI Strategy 2.0 are critical policies.”
Balisacan called for the passage of the Konektadong Pinoy Bill to address the digital divide and support growth in the IT-BPM and digital technologies sectors.
“Undeterred, the Marcos administration remains steadfast in its goal of genuine social and economic transformation, leading our nation closer to realizing a matatag, maginhawa, at panatag na buhay for all Filipinos,” he said.
In a separate statement, Finance Secretary Ralph Recto said the economic team is pushing for the swift Congressional passage of the P6.35 trillion proposed budget for 2025.
Recto said 62.5% of the proposed budget will be used for social and economic services, such as infrastructure, health, education, human capital development, social welfare, employment, housing, and other social protection programs.
He said these investments will create more quality jobs, increase their incomes, and reduce poverty incidence.
Recto said the government will also continue to capacitate local government units (LGUs) through the People’s Survival Fund (PSF) and push for more micro-insurance coverage for vulnerable communities.
For agriculture, Recto said the extension of the Rice Competitiveness Enhancement Fund (RCEF) until 2031—and its expected increase from P10 billion to P30 billion—will enhance local rice production and address the needs of rice farmers.
“The government has been responsive in providing the much-needed support for our farmers, fishermen, and the rest of the agriculture workers to improve their productivity,” he said.
“The government is likewise all hands on deck to ensure the quick delivery of assistance to typhoon-affected communities so we can rebuild and recover faster,” he added.
The DOF vowed to intensify whole-of-government efforts, including intensive monitoring and mitigation of price increases on food and non-food items, to keep inflation within the target range.
Recto added the government will sustain its spending on infrastructure projects, which is targeted to reach from 5 to 6% of GDP annually.
Meanwhile, Recto said the expected passage of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill within the year, will boost private investments.