AN ECONOMIST believes that with the slower growth this quarter, the government can no longer hit its growth target for 2018.
According to Cebuano economist Fernando Fajardo, it would take a “heroic 9.1 percent GDP growth” in the fourth quarter for the government to achieve its original seven percent target for the year.
The country’s gross domestic product (GDP) grew by 6.1 percent in the third quarter of 2018, from 6.2 percent in the second quarter.
GDP is the final value of the goods and services produced within a country during a specified period of time, normally a year. GDP growth rate is an important indicator of the economic performance of a country.
Trade, construction and manufacturing were the main drivers of growth for the quarter.
The Philippines logged 6.6 percent in the first quarter, and 6.2 percent (revised from six percent) in the second quarter.
“That (seven percent GDP target) is not possible with inflation still high and given the uncertainties of global trade, as affected by the US-China trade war, and the volatility of the global oil price,” Fajardo said.
The economist projects that the GDP growth might go below the six-percent territory in the fourth quarter or stay at six percent or close to it.
To boost the economy, Fajardo said the government cannot do much except to spend more. But he warned that government spending more than before would also mean more government deficits and inflation.
Fajardo also suggested that Bangko Sentral ng Pilipinas (BSP) may have to stop raising the interest rates in its next meeting to stop inflation, which already reached its peak last month.
“Raising the interest rate further may only discourage investments that will also slow down the GDP growth,” he said.
“We are not exactly exuberant about the 6.1-percent growth rate, but still comforted that we remain one of the fastest-growing economies in Asia, next to Vietnam at seven percent, China at 6.5 percent, and way ahead of Indonesia at 5.2 percent,” said National Economic Development Authority (Neda) Secretary Ernesto Pernia, in a statement.
Pernia said the slowdown in household consumption, particularly the marked slowdown in the household spending on food and other basic products, contributed to the slower growth.
Household consumption demand grew by only 5.2 percent in the quarter from a growth of 5.9 percent in the second quarter.
Household spending on food grew only by 2.8 percent in the third quarter, from 6.2 percent in the second quarter.
“With this, the Philippines needs to expand by at least seven percent in the fourth quarter to attain the low-end of the government’s target of 6.5 to 6.9 percent growth for the whole of 2018,” the Neda Secretary General said.
The government’s third quarter GDP growth target was 6.3 percent.
“With the measures we have been pushing for, the slowdown in household spending is deemed to be abatable and temporary. But we can only do so much. We need the support of many stakeholders here,” said Pernia.
He reiterated the call for Congress to pass without delay the Rice Tariffication Bill, which will reduce rice prices by P2.00 to P7.00 pesos per kilo and help enhance the productivity of farmers through its tariff revenues that will be given to them to improve their performance.
Agriculture suffered a 0.4 percent decline in the third quarter, due to the decline in the production of corn (14.4 percent), palay (5.4 percent), fishing (1.1 percent) and cassava (3.1 percent).
The drop in agricultural output was attributed to weather disturbances, which delayed the planting decisions of the farmers.
A business leader, however, downplayed the slowdown, saying it was heavily triggered by the high fuel prices that pushed consumers prices up.
Robert Go, president of Philippine Retailers Association-Cebu, said the slight dip is not something to worry about.
“Although it slowed from 6.2 percent to 6.1 percent, in reality, it is still high,” said Go.
Go, who owns a chain of supermarkets, noted that the government is already implementing measures to temper inflation.
He said the slowdown was something they expected at a period when inflation is high and world oil prices are up, not to mention the domestic pressures the country faced such as the lack in rice supply.
But Go said the price of oil in the world market is starting to go down. Rice, on the other hand, is no longer in shortage.
He expects the growth of fourth quarter to be high, on the back of the expected busy buying activities and strong remittance inflows from overseas Filipino workers (OFW) this Christmas season.
“OFW money will start coming in and consumption is expected to increase,” said Go.