Article by Ace Dizon

The Philippine economy hit an unexpected 5.9 percent gross domestic product (GDP) growth in the third quarter (Q3) of 2023 as reported by the Philippine Statistics Authority (PSA) on November 9, Thursday.

It is a significant improvement from the 4.3 percent recorded in the second quarter—the slowest pace in nine quarters since emerging from the pandemic-induced slump in the second quarter of 2021. 

This puts the January to September GDP at 5.5 percent. Socioeconomic Planning Secretary Arsenio Balisacan said that the fourth quarter growth would have to reach at least 7.2 percent to achieve the low-end of the government’s six to seven percent target growth this year.

The Philippines’ Q3 GDP growth was the highest among the major economies in Asia that released their data for the period, such as Vietnam with 5.3 percent, Indonesia and China with 4.9 percent, Malaysia with 3.3 percent, and Singapore with 0.7 percent.

Year-to-date, the Philippines also lead with 5.5 percent GDP growth, followed by China with 5.2 percent, Indonesia with 5.1 percent, Vietnam with 4.2 percent, Malaysia with 3.9 percent, and Singapore with 0.5 percent.

The primary contributors to the Q3 GDP were wholesale and retail trade; repair of motor vehicles and motorcycles at 5.0 percent; financial and insurance activities at 9.5 percent; and construction at 14.0 percent. 

Inflation as a growth hamper

Despite recording a surprising Q3 GDP, consumer spending was found to be decelerating. 

Household consumption grew five percent in the third quarter indicating a 0.5 percent slower rate than the previous quarter, which was pinned on high inflation and interest rates, dampening consumer spending.

From January to October, the average inflation rate is recorded at 6.4 percent, significantly higher than the target two to four percent this year.

The Bangko Sentral ng Pilipinas (BSP) had aggressively hiked interest rates to control the inflation, consequently slumping the growth of the economy. In a meeting on November 16, BSP monetary authorities would discuss whether additional tightening is necessary.

Economic growth amid rising jobless rates

While there was an increase in the country’s GDP, the PSA reported on Wednesday a 0.1 percent increase in unemployment rates for September from the 4.4 percent in August.

2.26 million people were either jobless or had lost their  business in September, which was slightly higher than the 2.21 million posted in August. 

The PSA recorded an underemployment rate of 10.7 percent in September, a one percent decrease from the previous month. This translated to 5.11 million underemployed people in September and 5.63 million in August.

Thumbnail from The Philippine Daily Inquirer