Philippines: Economy slightly accelerates from Q2's already-strong growth

In the third quarter of this year, GDP expanded 7.1% from the same period of last year. The reading exceeded the revised 7.0% rise recorded in Q2 (previously reported: +6.8% year-on-year) and beat market expectations of a 6.8% increase. In addition, the reading marked the fastest expansion in over three years.

Q3’s acceleration was mainly driven by a substantially less negative contribution of the external sector. Conversely, all components of domestic demand slowed to varying degrees. Total consumption expanded at the more moderate pace of 6.7% in Q3 (Q2: +8.3% yoy), marking the worst result in five quarters. Private consumption remained virtually unchanged, inching down from 7.4% growth in Q2, which represented the highest growth rate on record, to an equally strong 7.3% increase in Q3. Moreover, public consumption growth decelerated sharply from Q2’s 13.5% to 3.1% in Q3. Fixed investment, despite decelerating slightly, remained a bright spot, growing a strong 23.5% in Q3 (Q2: +24.6% yoy).

In the external sector, exports of goods and services expanded 8.8% in the third quarter, which was down from the 10.0% increase observed in Q2. Similarly, imports slowed from a 23.2% increase in Q2 to a 14.2% rise in Q3. As exports weakened less than imports, the external sector’s net contribution to overall economic growth improved, rising from minus 6.6 percentage points in Q2 to minus 2.8 percentage points in Q3—the best quarterly performance this year.

FocusEconomics Consensus Forecast panelists expect the economy to expand 6.5% in 2016, which is unchanged from last month’s estimate. For 2017, they also expect economic growth of 6.3%, which is up 0.1 percentage points from last month’s projection.