Q319 GDP rises to 6.2%

PHILIPPINES - In Brief 07 Nov 2019 by Romeo Bernardo

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After two disappointing quarters below 6%, GDP growth finally climbed to 6.2% in 3Q19. Accounting for the pick-up in growth were household spending, helped by lower inflation, public consumption and a significant acceleration in construction activity following government efforts to catch up on infrastructure spending. The construction sector’s value added grew by over 16% in 3Q19 (vs. just 2% in 1H19), which may be traced to sustained private building activities, including in PPP projects, and a turnaround in public construction. However, the latter was not enough to pull up overall investments, which contracted for the second straight quarter due to declining investments in durable equipment and inventory drawdown. The weakness in investments likely reflects policy uncertainties, both external (e.g., trade conflicts) and domestic (e.g., proposed corporate tax changes). Meanwhile, a smaller trade deficit also contributed positively to growth. The performance of external trade was the result mainly of falling goods imports (possibly reflecting some lagged response to the resumption of construction activity) as goods exports were also decreasing (mirrored on the supply side by continuing slowdown in manufacturing value-added growth to low single-digit). Robust growth in services exports, particularly tourism and BPOs, helped to boost overall export receipts.Aside from the jump in construction value added and the slowdown in manufacturing output, production side data showed continuing resilience in services and much improved agricultural growth. 3Q19 GDP performance brings the average growth rate thus far to 5.8%, our current year forecast. The country’s economic planning...