Slower GDP growth seen in Q3

MANILA, Philippines — The economy likely grew at a slower pace in the third quarter from the same period a year ago as elevated prices and interest rates may have weakened consumption.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said in a Viber message he expects the economy to have grown by 4.9 percent in the third quarter, citing “slower consumer or government spending amid persistent inflation and interest rates.”

He said geopolitical issues are also keeping commodity prices elevated.

Ateneo Center for Economic Research and Development director Ser Percival Peña-Reyes said in an email his third quarter gross domestic product (GDP) growth forecast is at 4.9 percent.

“Notable drivers are accommodation, transport, and professional or business services,” he said.

These forecasts are higher than the 4.3 percent GDP growth posted in the second quarter this year, but below the 7.6 percent expansion in the third quarter last year.

Makoto Tsuchiya of Oxford Economics said in an email third quarter GDP growth is expected to have settled at 4.3 percent, unchanged from the second quarter.

For full-year 2023, he said the GDP forecast is at 4.5 percent, with the external sector to remain subdued on the expected slowdown in the global economy.

While the information technology cycle has turned, he said its ascent would be very gradual and would weigh on the Philippines’ electronics sector, the country’s top merchandise export.

“Business investment will be hit from lower external demand, as well as higher interest rates, while households’ need to rebuild savings will constrain consumer spending,” he said.

For Oikonomia Advisory and Research Inc. president and chief economist John Paolo Rivera, the economy likely posted slower growth of four percent in the third quarter.

“A slowdown is expected primarily because of impact of policy tightening by the BSP (Bangko Sentral ng Pilipinas) and the sustained high interest rate that inhibits spending on both consumption and other productive economic activities,” he said.

He said the loss in purchasing power of both households and firms due to the relatively high prices, and slower government spending, would also affect the production and productivity of the agriculture, industry, and services sectors.

He also said full-year 2023 GDP growth could reach “up to 5.5 percent assuming recovery can manifest in Q4 (fourth quarter) as the impact of holiday consumption sets in.”

Colegio de San Juan de Letran Graduate School associate professor Emmanuel Lopez said 2023 GDP growth could be at 5.4 percent, which would be supported by consumption, with the expected increase in demand in holiday spending in the fourth quarter.

Earlier, National Economic and Development Authority Secretary Arsenio Balisacan said he hopes to see better third quarter GDP performance as the government has been working to address concerns on inflation, as well as the agencies’ underspending.

With GDP growth at 5.3 percent in the first half, he said the economy would need to grow by at least 6.6 percent in the second semester to achieve the government’s full-year 2023 growth target of six to seven percent.

The Philippine Statistics Authority is set to report the country’s third quarter economic performance on Nov. 9.