Business Bayani PH

In a recent announcement, National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan highlighted the resilience of the Philippine economy, showcasing a year-on-year GDP growth of 5.9% in the third quarter of 2023. 

This notable improvement from the 4.3% growth in the second quarter positions the Philippines as the fastest-growing economy among major emerging nations in Asia that have released their Q3 2023 GDP figures.

Compared to other Asian economies, including Vietnam at 5.3%, Indonesia and China at 4.9%, and Malaysia at 3.3%, the Philippines is leading the pack in economic growth. This growth acceleration propels the GDP growth rate for the first three quarters of 2023 to 5.5%. However, achieving the government’s annual target of 6 to 7% requires a 7.2% year-on-year growth in the fourth quarter.

The growth in the third quarter is widespread across all major economic sectors, with agriculture growing at 0.9%, industry at 5.5%, and services at 6.8%. Notably, the growth is not confined to a specific sector, indicating a robust and balanced economic expansion.

On the demand side, domestic demand, encompassing household final consumption spending, government final consumption expenditure, and gross capital formation, improved to 3.9% in Q3 2023 from 2.2% in the previous quarter. External demand or net exports increased by 12.9%, up from 8.5% in Q2 2023.

While household consumption growth slowed to 5.0% year-on-year in Q3 2023 due to increased food inflation, the seasonally adjusted quarter-on-quarter growth of household consumption remained solid at 4.8%.

Gross capital formation (GCF) saw a decline of 1.6% year-on-year, primarily attributed to substantial drawdown in inventories and a slowdown in durable equipment. However, public construction recorded significant growth, increasing by 26.9%, while private construction grew by 5.1%.

GCF quantifies a country’s total investment in new physical assets, including infrastructure and machinery, during a specific period. It reflects efforts to expand economic capacity, encompassing both public and private sector investments. Essentially, GCF measures the growth in a nation’s capital stock, crucial for economic development and sustainability.

Growth contributors

A key contributor to the overall growth was the acceleration of public spending in Q3 2023. Government Final Consumption Expenditure rose to 6.7% year-on-year, and Government Fixed Capital Formation growth increased to 26.9%, contributing 2.1 percentage points or 36% to the observed 5.9% GDP growth.

Secretary Balisacan praised national and local governments for acting on the economic team’s call to speed up spending plans. These aim to fast-track government programs, projects, and enhance public service. The increased public spending in Q3 counteracted the dip in overall gross capital formation, giving a vital boost to economic growth.

Despite recent easing of inflation to 4.9% in October 2023 from 6.1  in September 2023, the government remains focused on strategies to address potential impacts of El Niño, projected to intensify until early 2024. 

The President has instructed the government to provide support for agricultural production in provinces able to grow food during this period, along with emergency employment opportunities for farmers in affected provinces.

Non-monetary measures to protect the purchasing power of Filipinos remain essential in addressing high inflation. The Inter-Agency Committee on Inflation and Market Outlook plays a critical role in effectively managing the supply and demand situation of various commodities in the country.

Outlook

Looking ahead, the government is committed to implementing liberalization reforms, encouraging investment, and promoting growth. The recent approval of the consolidated Public-Private Partnership Act is expected to boost private sector involvement in infrastructure. 

Additionally, the government is dedicated to implementing the strategies outlined in the Philippine Development Plan 2023-2028. Progress is under assessment, and the upcoming Philippine Development Report will guide future actions.

In conclusion, Secretary Balisacan reassured Filipinos that every effort will be made to stay on course in achieving the economic and social transformation targets of the Philippine Development Plan 2023-2028, fostering a “matatag, maginhawa, at panatag na buhay para sa lahat.” ◼