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Philippine economic growth slowed to a year-over-year 4% in the third quarter as a public corruption scandal involving government infrastructure projects dampened consumer and consumer sentiment.
The gross domestic product (GDP) expanded by 4% year on year in the three months to September, several teases in the second quarter and a 5.2% clip in the Philippine Statistics Authorgen (PSA) released on Friday.
This was much lower than the 5.3% average among businessmen polled by 18 analysts and economic analysts.
On a seasonally adjusted quarterly basis, GDP grew by 0.4%, easing from 1.46% a year earlier.
“The Philippine economy continues to grow, but the performance of the third quarter reminds us of the urgent need to address important challenges and strengthen our construction of rapid, sustained, and planned growth,” said Development Secretary Arsenio M. Balisacan in a briefing.
The clip of the third quarter was the slowest growth that comes in from the 3.8% sales in the first quarter of 2021, when the country is still experiencing the impact of the Corona virus pandemic that has brought economic activity.
Without the pandemic, this was a weak expansion from the 3% growth in the third quarter of 2011.
This brought the nine-month average to 5%, slower than the 5.9% in the same period last year and puts the government’s 5.5%-6.5% full GDP growth target on hold.
Mr. Balisacan said that meeting even the lower end of the target can be “a big challenge,” especially when it is expected that there will be typhoons in this quarter so that they can find a long time for the expected use of the holiday.
“While we may not be able to fully recover from economic losses within a year, we believe these are temporary setbacks. With continued intervention and improved resilience, we expect the economy to recover by 2026.”
In the third quarter, household final spending, which accounts for more than 70% of the economy, grew by 40% from 5.3% to 5.3% in the second quarter and 5.2% last year.
This was a slight decrease from the 4.8% sales in the first quarter of 2021. Age-adjusted, it was the slowest growth in private consumption since rising 2.6% in the third quarter of 2010.
“The widespread cancellation of school, work, and travel activities due to typhoons may have consumed the funds,” said Mr. Balisacan.
“Furthermore, it is possible that consumer confidence is likely to be affected by continued spending and discussions on government infrastructure spending, depending on more households to plan purchases, especially durable goods…
Community Building
Meanwhile, government spending rose 5.8% last quarter, slowing the pace of 8.7% in the previous quarter, but faster than the 5% growth in the same period in 2024.
This comes as allegations of corruption surrounding flood control projects were launched by President Ferdinand R. Marcos, Jr. During his State of the Nation Community Building Mission. The investigation has been a flurry of allegations involving law enforcement officials, government officials, and private contractors.
The composition of the main capital, which is made of money in the economy, entered by 2.8% in the third quarter compared to the growth of 12.8% in the previous year and the increase of 1.2% in the second quarter.
National Statistician Claire Dennis S. The map that was laid down in the 26.2% release in the construction of the general government, worse than the 8.2% fall in the second quarter and the biggest drop in the third culture.
“Behind these trees, we see that there is a lot of room to improve the quality of spending,” said Mr. Balisacan. “In recent years, we have been aiming for 5% to 6% of GDP to spend on infrastructure just to catch up with all our neighbors anyway. But as we see now,
“It’s true, everyone knew it was a hoax… but it’s amazing to see how big it was.”
He said strengthening the currency through confidence and consumer confidence by making institutions stronger and improving governance is essential to ensuring economic recovery.
On the other hand, private construction “remains modest” in the third quarter, but investment in solid sources, said Mr. Balisacan.
He also added that the foreign sector performed well in the third quarter compared to the decrease in total exports seen in the three months before the start even in the prices of the Philippines in the United States took effect.
“Unfortunately, there is such a decline in other sectors of the economy that the positive effects of the foreign sector are muted.”
The industrial sector expanded by 0.7% in the third quarter, down significantly from 5% growth a year ago and 2.1% in the second quarter.
“On the supply side, services and industries posted weak growth, with a sharp crack in the construction of the community due to the strict social methods due to the general public needs of the DPWH (and the implementation of general needs that delayed government projects),” said Mr. Balisacan.
The Services sector, which had the largest contribution among major industries, expanded by 5.5% in the third quarter, slower than 6.3% a year ago.
Meanwhile, agricultural output grew by 2.8% in the third quarter, a reversal of the 2.7% decline a year ago but slower than the growth in the second quarter.
PSA added that among the main contributors to growth in the third quarter were the creation and sale of cars and motorcycles (5%), and business services (6.2%).
Gross national income posted annual growth of 5.6% in the third quarter, slower than the 8% expansion in the previous quarter and 6.8% a year ago.
Capital Net Primage increased 16.9% in the third quarter, slightly slower than the 20% in the same period in 2024.
The restoration of doubt
Hongkong and Shanghai Banking Corp. ASEAN Economist ARIS D. DACANAY said that the fulfillment of the social construction is expected to be given the last electricity.
“Without any policy or institutional changes, history has shown us that the withdrawal of funds can persist for more than a year,” he said adding that every 10% falls on the point of infrastructure growth by 0.4-0.6% point of 0.4-0.6% point of prayer by 0.4-0.6% point point of 0.4-0.6% point of prayer by 0.4-0.6 Phembu.
ANZ Research Arindam ChakraBarbast Research and Chief Economist for Southeast Asia and India Sanjay Mathur said in a report that a near-term recovery is unlikely due to the impact of the connectivity scandal.
“We do not expect a change in government spending until the administrative issues are resolved. The fiscal credit assessment does not show three months of weak progress so far.
They now expect the Philippine economy to expand by 4.9% this year, down from 5.4% previously, while lowering their forecast for 2026 to 5% previously.
The Chinabank study said it also said that the social construction sector “can continue to boost economic growth, as investigations continue and due to the proposed budget allocation of the DPWH for the next financial year.”
“In the fourth quarter, efforts to contain spending could help boost growth, while natural disasters pose a risk to employment,” it said.
Weak economic prospects and inflationary outlook could give the Bangko Sentral Ng Pilipinas (BSP) enough room to continue its tapering cycle, analysts said.
Analysts at ANZ said they expected two more 25 points.
At the time, Mr. Dacanay said that the base case reduced the 25-BP meeting in Dece DECE FODION’s CECE CECE DECE, but the decline opens the door to a larger cut, depending on the Federal Reserve’s stance.
In October, the BSP cut rates by 25 bps for the fourth straight meeting to bring the policy rate to 4.75%. Borrowing costs have now fallen by 175 bps since the start of its August 2024 cycle.
BSP Governor Eli M. Remolona, Jr. he has signed off on cutting spending until next year to help support domestic demand as corruption grips investor sentiment and economic prospects.
