The Philippine government is expecting higher economic growth rate in the fourth quarter of this year following a two-year high 7.1 percent growth in the third quarter.
The third quarter growth, the country's economic managers said Wednesday, is higher than the official six percent growth forecast for the whole year. It is also the fastest in southeast Asia, surpassing even Indonesia and Malaysia which posted a 6.6 percent and 5.2 percent growth, respectively.
Presidential Spokesman Edwin Lacierda said that historically, the third quarter usually posted the lowest growth.
"(But) in spite of that, it has turned out this year to be thus far the fastest quarter. So we see no reason why it should slow down in the fourth quarter considering that the holiday season is kicking in," Lacierda said in a briefing.
"Private consumption will definitely rise so we see a continued growth," Lacierda said.
He added there is no reason to doubt that the government could exceed its target of 5 percent to 6 percent growth for this year.
The National Statistical Coordination Board (NSCB) announced Wednesday morning that the Philippine economy rose by better than expected 7.1 percent in the third quarter on back of increased domestic spending, robust services sector and higher export revenues.
Given the strong growth posted in the first half of the year, the NSCB has calculated that the growth for the first nine months of the year is at 6.5 percent. This is higher than the official six percent target for the whole year.
"The (country's) economic expansion continues to be broad- based, as almost all sectors posted higher year-on-year growth rates," Socioeconomic Planning Secretary Arsenio Balisacan said in a separate briefing.
Balisacan said that robust consumer spending, which expanded 6. 2 percent on year, accounted for about half of the growth on the demand side. He said that easing inflation rate, which averaged at 3.5 percent in the third quarter combined with increased inflow of remittances from Filipinos working overseas and improved consumer confidence boosted consumption,
Increased public spending, likewise, supported third quarter growth, with government expenditure rising by 12 percent on year. This is on back of higher provision for conditional cash transfer and increased allotments for the implementation of different agencies programs and projects.
"In an environment where external demand is weak, local demand continues to spike because of consistently high public expenditure, " Budget Secretary Florencio Abad said, alluding to the U.S. fiscal cliff and European debt woes that are weakening global demand.
The NSCB said the third consecutive quarter of growth in exports contributed to the highest quarterly growth since the third quarter of 2011.
Another key driver is the robust services sector, which accounts for 58 percent of the GDP, the NSCB said. A growing tourism sector, real estate expansion and expanding transportation and communication industries bolstered the services sector.
Despite such positive news, Balisacan said the government will face the fourth quarter "not only with utmost optimism but also with careful vigilance."
"The slow recovery in the U.S. economy continues to affect us negatively as their monetary authorities try to prop up their economy through quantitative easing. This, combined with our strong macroeconomic fundamentals and good economic prospects, has resulted in the appreciation of our currency threatening to erode our competitiveness," Balisacan said.
Indeed, the Philippine peso continues to strengthen against the greenback, hitting a nearly five-year high of P40.85 against the dollar in this week's trade. A stronger peso, however, threatens the competitiveness of the country's exports and also weakens the spending power of families who rely from remittances sent by overseas Filipino workers.
But Balisacan assured that monetary officials are monitoring the situation and is ready to counter drastic volatility in the exchange rate./.