3Q16 GDP Accelerates

PHILIPPINES - In Brief 17 Nov 2016 by Romeo Bernardo

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Bucking expectations, the local economy grew 7.1% in 3Q16, faster than the previous two quarters. The surprising performance was due to: (a) continuing strong household consumption, particularly on food and transport items; (b) sustained robust growth in fixed capital, with private construction back to double-digit growth (16%) after four quarters and investments in durable equipment growing 30%; (c) continuing public construction spending (+20% vs. > 30% previously); and (d) a smaller drag from net exports. Production accounts reveal higher growth driven by the industrial sector and the positive contribution of agriculture (after five quarters of negative growth), with growth in the service sector slackening a bit.The 3Q16 performance brings year-to-date growth to 7%. Given the economy’s strong momentum, government's high-end growth target of 7% looks quite achievable.We will be releasing our outlook report in a couple of days. Real year-on-year growth, % 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Private consumption 7.1 6.6 6.7 6.2 5.5 5.0 6.3 5.8 6.3 5.7 4.9 5.3 6.1 6.4 6.1 6.5 7.0 7.4 7.3 Government consumption 24.8 10.3 15.6 12.7 7.3 9.4 4.3 -2.8 3.4 1.5 -1.1 11.0 0.2 2.4 15.7 15.8 11.8 13.5 3.1 Capital formation -26.4 -7.7 7.8 7.5 41.7 32.3 27.5 17.2 13.3 8.5 -1.1 3.2 12.5 21.4 14.5 13.3 26.6 25.0 20.0 Exports 8.1 9.9 6.2 10.4 -7.5 -6.2 8.7 2.6 13.4 9.0 11.8 12.9 10.6 5.1 9.8 10.9 7.3 10.0 8.8 Imports -1.0 7.9 7.2 8.4 1.4 -4.7 15.8 5.1 18.1 5.4 4.9 10.2 12.2 12.6 16.2 14.9 19.0 23.2 14.2 GDP 6.2 6.1 7.0 7.3 7.5 7.9 6.8 6.1 5.7 6.8 5.6 6.6 5.0 5.9 6.2 6.5 6.8 7.0 7.1 Net primary income 3.0 11.5 13.8 9.2 13.0 7.2 ...