Consumption in Philippines
Philippines - Consumption
GDP growth falls in the third quarter
According to a preliminary reading, GDP growth lost momentum in the third quarter, falling to 7.1% year-on-year from 12.0% in the second quarter, as surging Covid-19 infection rates prompted the introduction of restrictions. Nonetheless, Q3’s result substantially beat market expectations of a 3.8% expansion, amid the introduction of more flexible, small-scale lockdowns in September.
The slowdown was driven by weakening private consumption, fixed investment and exports. Private consumption increased 7.1% in the third quarter, which was below the second quarter's 7.3% expansion, while fixed investment growth slowed to 16.0% in Q3 from 39.8% in the previous quarter. Meanwhile, government consumption bounced back, growing 13.6% in Q3 (Q2: -4.2% yoy).
Exports of goods and services increased 9.0% on an annual basis in the third quarter, which was below the second quarter's 27.8% expansion. In addition, growth in imports of goods and services slowed to 13.2% in Q3 (Q2: +39.8% yoy). Thus, the external sector weighed on the headline reading, albeit to a lesser extent than in the prior quarter.
On a seasonally-adjusted quarter-on-quarter basis, economic growth rebounded in Q3, with GDP expanding a strong 3.8% and contrasting the previous period's 1.4% fall. The reading marked the fastest growth since Q3 2020.
Commenting on the outlook, Nomura’s Euben Paracuelles and Rangga Cipta remain skeptical that such momentum can be maintained:
“[The quarterly reading] was led by a surge in private consumption growth, which in turn was driven by household spending on transport and other discretionary items. We think this reflects pent-up demand after the country was going in and out of lockdowns in the past few months. However, we believe this is unsustainable given high unemployment rates. By sector, the vulnerable segments of the services sector also posted unusually high sequential growth that could easily reverse, in our view.”
Meanwhile, DBS’s Chua Han Teng highlights the importance of looser restrictions in the stronger than expected reading:
“Retail and recreation mobility has been recovering from August’s decline and bottom. It is positive that mobility has improved to its best levels for 2021. However, there is still room to go before returning to pre-pandemic levels, and catch up to Asian leaders, reflecting still harsh restrictions in the Philippines. In that regard, the authorities have shifted towards smaller scale lockdowns for high-risk areas and an alert level system to relax restrictions. Having piloted in Metro Manila (within NCR), the approach has been expanded beyond Metro Manila, starting from October 20 (Inquirer). Moreover, restrictions have been further relaxed in Metro Manila, starting from November 5 (CNN Philippines). This should result in higher mobility and more businesses reopening and operations at higher capacities.”
FocusEconomics Consensus Forecast panelists forecast GDP to increase 6.8% in 2022, which is unchanged from last month’s estimate. For 2023, they forecast economic growth of 6.8%.
Philippines - Consumption Data
|Consumption (annual variation in %)||6.4||7.2||6.0||5.8||5.9|
5 years of economic forecasts for more than 30 economic indicators.
Source: National Statistical Coordination Board.
|Bond Yield||4.44||-4.11 %||Dec 27|
|Exchange Rate||50.66||0.02 %||Jan 01|
Get a sample report showing our regional, country and commodities data and analysis.
Request a Trial
Start working with the reports used by the world’s major financial institutions, multinational enterprises & government agencies now. Click on the button below to get started.
January 13, 2022
Remittances totaled USD 2.5 billion in November, representing a 5.1% year-on-year expansion.
January 11, 2022
Merchandise exports jumped 6.6% on an annual basis in November, on the heels of October’s 2.0% increase.
January 5, 2022
Consumer prices flatlined over the previous month in December, coming in below November's 0.54% increase, amid softer price pressures for food.
January 3, 2022
The IHS Markit Manufacturing Purchasing Managers' Index (PMI) came in at 51.8 in December, up from November's 51.7.
December 15, 2021
At its monetary policy meeting on 15 December, the Central Bank of the Philippines maintained the overnight reverse repurchase facility rate at its record low of 2.00%, marking the ninth successive hold and matching market analysts’ expectations.