Philippine economy grows slower at 7.1% in Q3

The Philippines saw its economy growing for the second straight quarter this year, albeit at a slower pace compared to the prior period amid the reimposition of strict lockdowns during the third quarter to curb the spread of a more contagious Delta COVID-19 variant.

At a virtual press briefing, National Statistician Claire Dennis Mapa said the country’s third quarter gross domestic product grew 7.1%.

It is slower compared to the upwardly revised 12% growth posted in the second quarter of 2021.

This, however, is a reversal from the -11.4% gross domestic product seen in the third quarter of 2020.

Year-to-date, the country’s GDP grew 4.9%, within the upper end of the government’s downwardly revised target band of 4% to 5% for the entire 2021.

Mapa said the economy needs to grow by 5.3% in the fourth quarter of the year to achieve the upper end of the government’s full-year growth goal. 

“In the third quarter of 2021, we contained the Delta variant and sustained our economic expansion even as stringent quarantines were in place. Our strategy was correct. The results are clear,” said Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) chief Karl Kendrick Chua, who delivered the Duterte administration’s economic managers’ joint statement.

Along with Chua, the economic managers are Finance Secretary Carlos Dominguez III and Budget and Management officer-in-charge Tina Rose Marie Canda.

During the July to September period, Metro Manila - the Philippines’ economic center - was placed under the strictest enhanced community quarantine (ECQ) from August 6 to 20 followed by a prolonged modified ECQ from August 21 to September 15, wherein most business activities are prohibited, amid the threat of Delta variant.

The NEDA earlier estimated that the economy stands to lose P150 billion for each week several regions are under stricter quarantine modes: ECQ, modified ECQ, and general community quarantine with heightened restrictions.

Despite the strict lockdowns during the third quarter, Chua said that on a seasonally adjusted quarter-on-quarter basis the economy expanded by 3.8%.

“This indicates sustained recovery despite two weeks of the ECQ and a month of MECQ in the country’s economic centers,” the country’s chief economist said.

“While observing the health protocols, our people continued to work and businesses continued to operate. At the same time, we saw the new daily infections fall from a peak of 26,000 on September 11 to less than 1,800 last November 4. This is due to the rapid inoculation drive from July to September, where about 19 million Filipinos were fully vaccinated,” he added.

The NEDA chief said the careful balance between COVID-19 and non-COVID-19 needs led to the continued expansion of most sectors.

Contributors to growth

In particular, Mapa said the main contributors to the growth from the production side were wholesale and retail trade, repair of motor vehicles and motorcycles contributing 1.3 percentage points; manufacturing, sharing 1.04 percentage points; and construction with 0.95 percentage point contribution.

Meanwhile, major to the growth of GDP from the expenditure side were: household final consumption expenditure, 5.2 percentage points; construction, 2.5 percentage points; and government final consumption expenditure, 2.0 percentage points.

“We expect this to be sustained in the fourth quarter given more relaxed restrictions and a higher vaccination rate,” Chua said.

Among the major economic sectors, industry and services posted positive growths of 7.9% and 8.2%, respectively.

Agriculture, forestry, and fishing posted a contraction of -1.7% in the third quarter of 2021.

“The increase in palay production, which was aided by the continued implementation of the Rice Competitiveness Enhancement Fund, was more than offset by typhoon damages to other agricultural crops and by the African Swine Fever to livestocks,” Chua said.

Total investments increased by 22%, driven by public and private construction that grew by 55.3% and 12.2% respectively.

“The government’s decision to allow all construction activities to resume regardless of the area’s quarantine status must be credited for this,” Chua said.

“Our external trade grew as well,” he added.

This, as exports grew by 9% while imports grew by 13.2%.

“The high growth of imports reflects the strong recovery of consumption and investment spending. The moderate growth of exports reflects both the global recovery as well as global logistics issues,” the NEDA chief said.

Prospects

The country’s chief economist said that the National Capital Region’s shift to Alert Level 2 is “broadly in line with our target.”

The NEDA earlier estimated that Metro Manila’s de-escalation to Alert Level 2 can increase GDP by P3.6 billion and employment by 16,000 per week.

Metro Manila is under Alert level 2 from November 5 to 21, 2021.

“With adequate supply of vaccine doses, the government is further accelerating the vaccination program over the next few weeks. With current trends, we expect to achieve Alert Level 1 by the onset of the New Year,” Chua said.

“To further sustain our growth this year and next year, the government will further accelerate the vaccination program, reopen to Alert Level 1 in January 2022, and maximize the use of the 2021 budget,” he added.

In the remaining eight months of the Duterte administration, the NEDA chief said the government’s top priority will be laying the foundation for a “COVID-19 resilient society that can live with the virus.”

“We will return to the path of rapid and more inclusive growth. We owe this to the people. It will be done,” Chua said.

Palace welcomes development 

Malacañang on Tuesday welcomed the 7.1% economic growth, saying it is a significant gain even amid COVID-19 restrictions.

Presidential spokesperson Harry Roque was referring to the country's economy growing for the second straight quarter at 7.1%, with the main contributors to the growth from the production side were wholesale and retail trade, repair of motor vehicles and motorcycles contributing 1.3 percentage points; manufacturing, sharing 1.04 percentage points; and construction with 0.95 percentage point contribution.

“Mabuting balita pa rin ito dahil ang paglago'y nangyari sa gitna ng pinahigpit na quarantine dahil sa Delta variant (This is good news since it happened despite the restrictions we implemented),” Roque said.

At least 29.8 million Filipinos are fully vaccinated against COVID-19 as of November 8.

The government has also eased alert level in Metro Manila at Alert Level 2, allowing leisurely activities even among the unvaccinated minors provided that they are accompanied by fully vaccinated adults. — with Llanesca T. Panti/KG/RSJ, GMA News