Philippine Q4 GDP on trend but 2018 growth misses govt target

25, Jan. 2019

MANILA, NNA – The Philippines’ economy grew 6.1 percent on year in the October-December quarter, maintaining the recent growth trend of around 6 percent as easing inflation provided some support to sluggish household spending, official data released Thursday showed.

For the whole of 2018, the gross domestic product rose 6.2 percent, slowing from 6.7% in 2017 amid uncertainty over global growth and missing the government target of 6.5 to 6.9 percent, the Philippine Statistics Authority said.

Summary: The main drivers of Q4 growth after Q3’s downwardly revised 6.0 percent growth (preliminary 6.1 percent) were construction, up 21.3 percent y/y, and spending on vehicles and household goods, up 5.9 percent.

Inflation eased in the last two months of 2018 after having peaked in October on food supply constraints and higher oil prices.

The manufacturing sector rose 3.2 percent in the final quarter of 2018, decelerating from 7.9 percent a year earlier. The government sees it as “an area of concern.”

Takeaway: Despite the global uncertainty caused by the U.S.-China trade dispute, the Philippine government is looking at the bright side of the recent fall in crude oil prices: It should help tame inflation further and support domestic demand.

But Manila is also mindful of external downside risks: tighter financing conditions in emerging markets due to the appreciation of the U.S. currency and rising risk premiums.

On the upside, public spending is expected to remain high ahead of the Philippines’ mid-term elections in May and the Southeast Asian Games that the country is hosting from Nov. 30 to Dec. 11.