"Philippines Reports Slower GDP Growth in Q3 Amid Impact of Severe Weather"
National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan stated that for the Philippines to meet the lower end of its 2024 growth target of 6 to 7 percent, the economy needs a fourth-quarter growth of at least 6.5 percent. The recent economic slowdown, he noted, was driven in part by agricultural contractions and a deceleration in industrial and service sectors. Agriculture faced setbacks from the earlier El Niño phenomenon, which impacted crop yields, and later from successive storms and the monsoon rains (habagat) that disrupted the middle of the year.
According to Balisacan, adverse weather also impacted fishing, aquaculture, and livestock, while multiple typhoons led to work and class suspensions that slowed industrial and service sector activities due to administrative delays and supply chain disruptions. Tourism took a hit as well, with weather disturbances limiting domestic mobility. Public construction projects were similarly delayed, as adverse weather hindered operations, while exports, particularly electronics, slowed due to global inventory adjustments.
On the positive side, private construction maintained strong momentum, growing at 11.9 percent from 10.3 percent in the second quarter. Domestic demand also showed resilience, growing by 6.6 percent in Q3, slightly down from 7.4 percent in Q2. Household spending saw a boost of 5.1 percent in Q3 2024, partly supported by easing consumer inflation, Balisacan said.
The NEDA chief remains optimistic about meeting the growth target, given the likelihood of increased holiday spending, stabilizing prices, lower interest rates, and a robust labor market. He highlighted a decrease in unemployment, which supports continued growth in household consumption, particularly as inflation stabilizes within the target range of 2 to 4 percent. Additionally, recovery efforts in typhoon-affected areas should drive further economic activity.
In monetary policy, the Bangko Sentral ng Pilipinas (BSP) has eased interest rates by a cumulative 50 basis points this year, bringing the benchmark rate to 6 percent. BSP Governor Eli Remolona hinted at a possible additional rate cut of 25 basis points in December, pending favorable conditions.
Market expert Manny Ocampo, senior managing director at ICCP, expressed disappointment with the recent GDP figures, which fell short of his 6 percent growth expectation. He noted the adverse seasonal impact of typhoons on agriculture during Q3 and voiced concerns about delayed government spending, which, in his view, has held back economic momentum. Ocampo remains cautious about the government’s ability to meet its 2024 growth targets, particularly as agricultural challenges persist without significant new government investment in the sector.
“And maybe next year, towards the election, you'll see more a more active government spending program there,” he said.