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Philippines' annual economic growth decelerated notably in the third quarter compared to the expansion seen last year, but it stabilized when compared to the revised growth in the second quarter of this year.
Philippines gross domestic product or GDP rose 0.8% year-on-year in the third quarter, unchanged from the revised figure of 0.8% in the second quarter, the National Statistical Coordination Board said Thursday. Economists had expected 1.9% expansion. A year ago, the economy expanded 4.6% in the third quarter.
Growth in consumer spending decelerated to 4% in the third quarter from 4.4% a year ago. Increased spending to address the global crisis led to 7.9% growth in government spending. However, it was slower than the 11.8% increase recorded in the previous year. Due to a fall in investments in durable equipment and heavy withdrawals from stocks, capital formation grew at a slower pace of 1.6% compared with 7.1% growth recorded last year.
Exports continued to drop in the third quarter with a 13.7% fall, as both merchandise and non merchandise exports declined. Total imports recovered from the slump of the first two quarters with 0.2% growth. Total merchandise imports grew 1.4%.
On a seasonally adjusted quarter-on-quarter basis, GDP grew 1% in the third quarter, but slower than the revised 1.7% growth in the second quarter. Economists had forecast 1.3% growth. Gross national product or GNP sequential growth accelerated to 2.2% from 1.9% in the second quarter. Annually, GNP grew 3.5%.
Official data on third quarter economic performance came a day after the International Monetary Fund revised up its growth forecast for the Philippines. The Washington-based lender now expects 1.5% growth this year, higher than the 1% growth estimated previously. Growth is then predicted to accelerate to 3.5% in 2010. The Philippine government expects GDP to grow 0.8%-1.8% this year and by 2.6%-3.6% in 2010.
The IMF forecasts the country's inflation to reach 3.1% this year, an increase from 2.8% predicted earlier and may rise again to 4.3% next year.
To boost the economic growth, the Philippines central bank kept its key interest rate unchanged for the third straight rate-setting session in November. It kept its overnight borrowing or reverse repurchase rate steady at 4%. In November, the World Bank had approved a $405 million loan to the Philippines to assist the government's social welfare reform efforts.
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