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Philippine economic growth beats estimates despite curbs


The Philippines’ economic recovery gained traction in the third quarter despite tough curbs on movement amid the nation’s worst COVID outbreak yet.

Gross domestic product grew a seasonally adjusted 3.8% in July-September from the previous quarter, the statistics agency reported Tuesday, higher than all estimates in a Bloomberg survey of 13 economists. That compares to the 1.4% median growth estimate in the survey and a revised 1.4% contraction on a sequential basis in the second quarter.

Compared to the previous year, GDP expanded 7.1% in the third quarter, slower than the revised 12% growth in April-June.

Sequential growth in the third quarter “indicates sustained recovery” despite tough restrictions, Economic Planning Secretary Karl Chua said in a briefing. “Our strategy is correct.”

The economy had been expected to disappoint in the third quarter as daily infections rose to records and the capital region was placed under lockdown, pushing up the jobless rate. Restrictions have since been eased and movement in shops and workplaces has improved as infections ebb.

The peso rose as much as 0.4% against the dollar in the spot market, while the benchmark Philippine Stock Exchange Index gained as much as 0.5% after the data.

“Stronger-than-expected growth underlines resilience to headwinds from another lockdown in Metro Manila and the country’s worst Covid-19 outbreak yet. The easing of those restrictions and a receding virus wave should lift growth further in 4Q, especially given the high vaccination rate in the capital region,” Justin Jimenez of Bloomberg Economics, said.

The quarterly performance all but ensures the economy will fulfill the government’s growth target of 4%-5% for the year, Chua said.

“We will return to the path of rapid and more inclusive growth,” he said.

Even with a better growth outlook, central bank Governor Benjamin Diokno has said he’s prepared to keep monetary settings loose to boost the economy, which is expected to log one of the slowest recoveries in Asia. Policy makers are scheduled to set the key rate on Nov. 18.

“Output is set to jump again in Q4 following a sharp drop in virus cases and the further easing of restrictions,” Alex Holmes, Asia economist at Capital Economics Ltd., wrote in a note. “That said, even after rapid growth in the second half of this year, the recovery will still have a long way to go, and the economy will still be in catch-up mode throughout 2022.”

On a seasonally adjusted basis, only services grew, expanding by 6.6% quarter-on-quarter.

Agriculture and industry sectors shrank by 0.7% and 0.3%, respectively, from the previous quarter. — Bloomberg

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