AS-DELIVERED STATEMENT

THIRD QUARTER 2023 PHILIPPINE ECONOMIC PERFORMANCE

NEDA Secretary Arsenio M. Balisacan

November 9, 2023

 

Colleagues in government;

Friends from the media;

Ladies and gentlemen;

Good morning.

We are pleased to announce that the Philippine economy continues to grow despite several major headwinds that we have experienced and continue to experience. The year-on-year 5.9 percent GDP growth in the third quarter of 2023 is a marked improvement from the 4.3 percent growth in the second quarter. This performance makes our economy the fastest among the major emerging economies in Asia that have released their third-quarter 2023 GDP growth: Vietnam at 5.3 percent, Indonesia and China at 4.9 percent, and Malaysia at 3.3 percent.

The growth acceleration puts the GDP growth rate for the first three quarters – January to September –  of 2023 at 5.5 percent. The economy will need to grow by 7.2% year-on-year for the fourth quarter of 2023 to attain at least the low end of the government’s target of 6 percent to 7 percent for the entire year of 2023.

GDP growth in the third quarter was broadly based, with all major economic sectors posting growth, with agriculture growing at 0.9 percent, industry at 5.5 percent, and services at 6.8 percent.

From the expenditure or demand side of the economy, domestic demand—the sum of household final consumption spending, government final consumption expenditure, and gross capital formation or investment–improved to 3.9 percent in the third quarter of 2023 from 2.2 percent in the previous quarter. External demand or net exports, on the other hand, increased by 12.9 percent in the third quarter, up from 8.5 percent in the second quarter of 2023.

Household consumption growth slowed down year-on-year to 5.0 percent in the third quarter of 2023 from 5.5 percent in the previous quarter as food inflation increased to 8.2 percent in the third quarter from 7.4 percent in the second quarter of 2023. Nevertheless, the seasonally adjusted quarter-on-quarter growth of household consumption was solid at 4.8 percent.

Gross capital formation declined year-on-year by 1.6 percent, largely due to the substantial drawdown in inventories and the slowdown in durable equipment – 1.7 percent from 10.5 percent in Q2 2023. These outweighed the faster growth in both public construction  which grew by26.9 percent from 0.7 percent and private construction which grew by 5.1 percent from 4.3 percent.

The acceleration of public spending in the third quarter is notable, tempering the decline of overall gross capital formation. Year-on-year growth of Government Final Consumption Expenditure rose to 6.7 percent in the third quarter from negative 0.7 percent in the second quarter. Similarly, Government Fixed Capital Formation growth increased to 26.9 percent in the third quarter from 0.7 percent in the second quarter. Overall, government spending contributed 2.1 percentage points or 36 percent of the observed 5.9 percent GDP growth.

We commend the national government agencies and local government units for responding to the economic team’s call to implement catch-up expenditure plans. These plans aim to expedite the implementation of government programs and projects and improve the delivery of public services under the 2023 public expenditure program. These actions addressed the contraction in government spending in the previous quarter. We hope to maintain this momentum for the remainder of the year and the years to come.

While inflation recently eased to 4.9 percent in October 2023 from 6.1 percent in September 2023, the government will continue to prioritize strategies in response to the potential impacts of El Niño, which is projected to intensify in the coming months until early 2024.

On the instruction of the President, the government will provide much-needed support for agricultural production in the provinces that will still be able to grow food during the worst of El Niño. Additionally, the government will provide emergency employment opportunities for farmers in provinces who cannot produce during this period. These efforts will be coordinated through the inter-agency El Niño Task Force.

We emphasize that non-monetary measures to protect the purchasing power of Filipinos remain crucial as we address the issue of high inflation. Hence, the proactive role of the Inter-Agency Committee on Inflation and Market Outlook is critical in effectively managing the supply and demand situation of various commodities in the country.

Moving forward, we will continue to leverage the full implementation of liberalization reforms to intensify investment promotion in the country and boost growth, thereby generating higher-quality employment opportunities for our growing labor force. We thank Congress for passing the consolidated version of the Public-Private Partnership Act. Once signed into law by the President, which we expect to happen within the year, this legislation will promote greater private sector participation in the country’s infrastructure development.

Moreover, we remain committed to fully implementing the strategies and the transformation agenda outlined in the Philippine Development Plan 2023-2028. The government is currently assessing our progress concerning the target outcomes and the strategies identified in the PDP. This Philippine Development Report will provide the necessary guidance on the way forward.

To conclude, we would like to assure all Filipinos that we will make every effort to remain on course in attaining the economic and social transformation targets of the Philippine Development Plan 2023-2028 and achieve a matatag, maginhawa, at panatag na buhay para sa lahat. 

Thank you.

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