Philippine economy grows faster by 7.6% in Q3 2022

The Philippine economy accelerated in the third quarter of the year — the first quarter of the Marcos administration — despite a high inflation environment, the Philippine Statistics Authority (PSA) reported on Thursday.

The economy as measured by gross domestic product (GDP) — the total value of goods and services produced in a specific period — grew by 7.6% during the July to September period, faster than the upwardly adjusted 7.5% GDP growth in the second quarter of 2022.

This is also higher than the 7% GDP growth posted in the third quarter of 2021.

The third quarter economic growth also surpassed the median analyst forecast of 6.3%, Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) chief Arsenio Balisacan said at a press briefing.

Balisacan said the Philippine economy is on track to hit the government’s target band of 6.5% to 7.5% growth for 2022.

“Given the latest GDP outturn, our economy needs to grow by 3.3% to 6.9% in the fourth quarter,” he said.

The country’s chief economist said that the 7.6% growth during the July to September period puts the Philippines second in the Association of Southeast Asian Nations (ASEAN) region, next to Vietnam’s 13.7% and above Indonesia’s 5.7%.

The main contributors to the third quarter growth were the following:

Wholesale and retail trade; repair of motor vehicles and motorcycles, 9.1%
Financial and insurance activities, 7.7%
Construction, 12.2%

Meanwhile, all major economic sectors, namely Agriculture, forestry, and fishing; Industry; and Services posted positive out-turns during the quarter with respective growths of 2.2%, 5.8%, and 9.1%.

On the demand side, Household Final Consumption Expenditure (HFCE) grew by 8%.

Likewise, Government Final Consumption Expenditure (GFCE) grew 0.8%; gross capital formation, up 21.7%; exports of goods and services, up 13.1%; and imports of goods and services, up 17.3%.

“In this time of heightened global uncertainty and elevated consumer prices, this high-growth performance in the third quarter bodes well for our efforts to ensure quality job creation and poverty reduction to achieve inclusive growth,” the NEDA chief said.  

Inflation has been trending above 6% in the past quarter — 6.4% in July, 6.3% in August, and 6.9% in September — driven by rising food, utilities, and transport costs amid local and external pressures on commodity prices.

Nonetheless, Balisacan said, “This economic performance largely benefitted from the further easing of mobility, including the resumption of face-to-face classes, which boosted consumption among Filipinos.”

“The relaxation of border restrictions and more simplified travel protocols also supported the growth of local tourism and other sectors severely affected by the pandemic, leading to economic expansion in the third quarter. The growth in these sectors brought by our collective efforts to jumpstart the economy runs in parallel with the rise in the country’s labor force,” he added.

The NEDA chief also cited the decline in unemployment rate in September to 5% from 8.9% in the same period last year. It is also the lowest since January 2020, translating to a decrease of 1.8 million unemployed individuals.

“I’d also like to highlight our education sector. After two years of intermittent distance learning during the pandemic, schools reopened for face-to-face classes last August. Such return is vital to preventing further productivity losses that can weaken our future workforce. With these socioeconomic gains, it is clear that the Philippines is on the road to fully recovering from the economic scarring brought on by the COVID-19 pandemic,” he said.  

First quarter of Marcos admin

Balisacan noted that the third quarter or the July to September period "is already the first quarter of the administration.”

“So, clearly the fact that the economy continued to perform and even accelerated in the last quarter suggests a good deal of confidence in the administration,” he said.

President Ferdinand "Bongbong" Marcos Jr. was sworn into office on June 30, 2022.

“Will that be sustained? I believe so. With the trust that you have, and what we are telegraphing to our investors that the Philippine economy is open for business, listen to our investors and what constraints they face and do our best to address constraints so that they can provide quality jobs for our poor men,” Balisacan said.

Interventions

To address inflation and poverty, Baliscan reiterated the government’s initiative of providing cash transfers, fuel discounts, and other forms of targeted assistance.

“We are also considering the extension of Executive Order No. 171, which significantly reduces tariffs on rice, pork, and corn, thereby enhancing food security while food prices remain elevated,” he said.

The government will also fully implement landmark reforms such as the amendments to the Public Service Act, Foreign Investments Act, Retail Trade Liberalization Act, and the Corporate Recovery and Tax Incentives for Enterprises or the CREATE law to support businesses and  create a more enabling regulatory and investment climate.

“Meanwhile, the revised implementing rules and regulations of the Build-Operate-Transfer law, which provides for amendments in critical areas such as project approval, disclosures, and government liabilities, are expected to make Public-Private Partnerships more efficient and transparent. These reforms will encourage more private sector engagement and can lead to job creation, improve the delivery of public services, and support infrastructure development,” Balisacan said. —KBK, GMA Integrated News