Finance Chief Recto sees 6% growth in third quarter

The Philippine economy likely grew by 6% in the third quarter as declining inflation may have fueled a rebound in consumer spending, Finance Secretary Ralph G. Recto said.

“I’m still hoping 6%, more so that inflation is declining,” Mr. Recto told reporters on the sidelines of an event late on Tuesday.

“The biggest [driver] would be household consumption, which is 75% of the economy,” he added.

For as long as household consumption grows by 6%, Mr. Recto said, the economy would likely grow by 6%. 

Economic managers are targeting 6-7% growth this year. 

In the second quarter, gross domestic product (GDP) expanded by 6.3% as improved government spending and investments offset weak consumption growth. Household spending in the April-June period grew by 4.6% year on year, the weakest since the first quarter of 2021. 

For the first half, GDP growth averaged 6%. The economy has to grow by at least 6% in the second half to hit the low end of the target.

The statistics agency is expected to release third-quarter GDP data on Nov. 7.

Mr. Recto said slowing inflation likely helped drive growth in the July-to-September period.

The consumer price index eased to a four-year low of 1.9% year on year in September from 3.3% in August as food and transport costs declined.

Year to date, inflation averaged 3.4%, settling within the 2-4% target range of the Bangko Sentral ng Pilipinas (BSP).

Mr. Recto said the Development Budget Coordination Committee (DBCC) could meet before yearend to review the macroeconomic assumptions and targets.

“I think the DBCC should meet but maybe in December… not really to adjust but just to review not only growth targets but take a look at the entire macro-fiscal framework,” he said.

Mr. Recto said that any adjustments to the government’s growth and fiscal targets should be for next year, as economic managers also have to consider other factors such as external headwinds.

“We have to take a look at what’s happening globally also. For example, we have to prepare just in case you have more tensions in the Middle East,” he said.

At its last meeting in June, the DBCC kept the 2024 GDP growth target at 6-7% and 6.5-7.5% GDP expansion for 2025. It targets 6.5-8% growth from 2026 to 2028.

Earlier this week, Budget Secretary and DBCC Chairperson Amenah F. Pangandaman raised the possibility of an upward revision of this year’s growth target amid slowing inflation and improved state spending.

Meanwhile, Albay Rep. Jose Ma. Clemente S. Salceda, who also heads the House Committee on Ways and Means, gave a 5.7-6.1% GDP growth forecast for the third quarter.

“Inflation, while obviously slowing down, would still have had some real impact on the consumption patterns of consumers. I expect robust consumption of basic goods to have persisted, but some weakness in discretionary spending,” he said in a Viber message.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said he sees at least 6% economic growth in the July-to-September period, driven by better jobs data.

“Easing inflation trend would boost consumer spending… amid the net improvement in employment data in recent months to among the best in 19 years,” he said in a Viber message.

The unemployment rate eased to 4% in August from 4.7% in July and 4.4% in August last year. This translated 2.07 million unemployed Filipinos, down by 305,000 from July and by 149,000 from a year earlier.

The employment rate in August rose to 96%, equivalent to 49.15 million employed Filipinos, from 95.3% in July and 95.6% a year ago. — Beatriz Marie D. Cruz