Surprise 3Q GDP growth

PHILIPPINES - In Brief 10 Nov 2022 by Romeo Bernardo

---

GDP grew 7.6% in 3Q, much faster than the 6.1% median forecast of analysts. The seasonally adjusted figures showed GDP growing 2.9% over 2Q, its strongest since 4Q last year and a reversal from the slight dip in 2Q. 3Q performance reveals that the economy continued to benefit from the removal of remaining covid19-related restrictions which muted any early impact from the turbulence in financial markets. Demand-side accounts show that the economy’s growth was driven mainly by robust household consumption, reaching 8% yoy. Despite rising inflation, household incomes were boosted by the strong growth in peso-equivalent overseas remittances and improving local employment. In the face of rising borrowing costs, fixed investments growth remained at double digits (+10%), but still lagging pre-pandemic levels, with inventory re-stocking helping to raise overall investments (+21.7%). Meanwhile, government consumption growth weakened (+0.8%) in line with fiscal consolidation efforts while a much wider trade gap (+32%) offset some of the growth in domestic demand. Production accounts show that growth was driven mainly by service sectors (+9.1%), particularly finance (benefiting from credit growth and improved interest margins) as well as retail trade, accommodation and food services, and transport (benefiting from increased mobility and recovering tourism). Overall industrial output growth slowed, with manufacturing picking up speed but at quite slow pace (+3.6%). A 2.2% growth in agriculture also helped add to GDP growth. The strong 3Q performance brings the economy’s growth in the first three quarters to 7.7%, on track to achieving government’s 6.5% to 7.5% GDP growth target. T...