STATEMENT
Arsenio M. Balisacan, PhD
Secretary, National Economic and Development Authority
Press Conference on the Philippine Economic Performance for the Third Quarter of 2024
Philippine Statistics Authority, East Avenue Office, Quezon City
7 November 2024 | 10:00 A.M.
Good morning, everyone.
Today, as announced by the National Statistician, Undersecretary Dennis Mapa, the country’s gross domestic product (GDP) growth rate for the third quarter of 2024 was 5.2 percent—down from the 6.4 percent growth rate recorded in the second quarter. This brings average GDP growth for the first three quarters of 2024 to 5.8 percent, slightly below our target of 6 to 7 percent for the year.
I know that you have several questions on your mind, like:
(1) What brought about this slowdown?;
(2) Can we still achieve our growth target for 2024?; and
(3) What should we prioritize going forward?
I will endeavor to answer these questions, especially to assure you and the public that we have started working on the priorities going forward.
First, what brought about the slower growth rate?
Allow me first to present the context of the recent GDP growth figures.
Our economy continues to grow steadily; the latest GDP figures indicate continuous expansion. Of the countries that have reported their third-quarter GDP growth rates, we remain one of the fastest-growing Asian economies. We follow Vietnam, which posted a 7.4 percent growth rate, and are ahead of Indonesia (with 4.9 percent), China (4.6 percent), and Singapore (4.1 percent).
On the production side, the slowdown was due to a contraction in Agriculture and a moderation of growth in Industry and Services.
The crops subsector of the Agriculture sector posted a year-on-year decline of 2.8 percent, reflecting the impacts of the El Niño phenomenon during the planting season and the effects of seven typhoons, in addition to the Habagat, during the harvest season.
Fishing and aquaculture also declined due to the 29-day fishing ban in Cavite and Bataan amid an oil spill incident last July and the cancellation of fishing trips due to bad weather conditions. Likewise, livestock production decreased due to the recent outbreaks of African Swine Fever (ASF), such as in Batangas last August.
The sectors of Industry and Services experienced moderate year-on-year growth rates of 5.0 percent and 6.3 percent, respectively, in the third quarter of 2024. The successive typhoons suspended classes and work in government and some private offices, resulting in administrative delays and supply chain disruptions.
Meanwhile, domestic demand growth remained robust at 6.6 percent in the third quarter of 2024, though a bit slower than the 7.4 percent in the second quarter. Household spending accelerated to 5.1 percent in Q3 2024, which was encouraged by slower consumer price inflation. However, the slowdown in tourism and leisure-related spending offset this, as weather disturbances limited domestic mobility. We note that 138 flight cancellations occurred during the third quarter, as reported by NDRRMC.
Total investments sustained its double-digit expansion of 13.1 percent in Q3 2024. The turnaround in investments in durable equipment mainly drove capital formation growth. Private construction also sustained double-digit growth (11.9 percent from 10.3 percent), while public construction slowed down (3.7 percent from 21.7 percent) due to administrative delays and disruptions associated with adverse weather conditions.
On the other hand, exports of goods and services recorded a year-on-year decline of 1.0 percent, while imports increased. These imply a deep contraction in net exports by 32.6 percent. Exports of goods were pulled down by the sharper decline in electronics products, particularly semiconductors (-17.9 percent). The industry is undergoing inventory corrections and has yet to meet the demands for new products in the global market. Meanwhile, the slowdown in the export of services was mainly due to the decline in air travel, as discussed.
And so, can we still achieve our growth target for 2024?
The economy needs to grow by at least 6.5 percent to meet the government’s target for the last quarter 2024. We remain optimistic that this growth target is attainable.
We anticipate increases in holiday spending, more stable commodity prices (given low inflation), lower interest rates, and a robust labor market. In the areas affected by typhoons, recovery efforts will drive economic activity and, hopefully, build back better.
Due to easing inflation, consumer and business sentiments have shown signs of improvement. To boost liquidity, the Bangko Sentral ng Pilipinas cut policy rates by a cumulative 50 basis points in August and October 2024, alongside a reduction in reserve requirements. We expect these interventions to spur growth in private spending, particularly on big-ticket consumer items and investments in capital-intensive infrastructure.
To support our food security objectives such as affordability of basic food commodities, the Department of Agriculture (DA) will accelerate the rollout of its ASF vaccination program, implement stricter biosecurity measures, and increase indemnification for affected hog farmers.
The combined agricultural damage and losses from the six typhoons in Q3 2024 and Severe Typhoon Kristine stood at PHP 15.8 billion while damage to infrastructure, houses, and other assets is estimated at PHP 9.6 billion. As of October 23, 2024, the PAGASA forecasts two to eight tropical cyclones from November 2024 to April 2025.
Thus, in the short term, our priority is to ensure the safety of Filipinos. As directed by the President, we must improve the efficiency and effectiveness of our disaster preparedness and response. National and local government units, in partnership with the private sector, will immediately work on rebuilding and restoring damaged public infrastructure, including electric and telecommunication lines, as well as major thoroughfares such as airports and seaports to ensure immediate resumption of economic activities, particularly in major tourist areas.
Government agencies are assisting to accelerate the recovery of typhoon-affected areas. The Department of Agriculture has provided PHP 541 million in agricultural inputs to the affected areas and allocated PHP 500 million to the Survival and Recovery (SURE) Assistance Program. Meanwhile, the Department of Human Settlements and Urban Development has provided cash and housing materials to assist in the rebuilding of damaged housing units.
What are our priorities to ensure that our medium-term growth trajectory remains on track?
We must aggressively push for the sustained implementation of our infrastructure drive, ensuring that we provide adequate fiscal support to our flagship projects and expedite the processes necessary for the timely rollout of public and private investments. In this regard, it is imperative that we intensify our efforts to improve the ease of doing business and elevate our competitiveness to further strengthen investor interest and confidence.
To strengthen our performance in the external sector, we continue to engage in new free trade agreements (FTAs) amid policy uncertainties in the Philippines’ major trading partners. The Philippines has resumed its FTA negotiations with the United Arab Emirates and the European Union to expand market access for our non-traditional products, such as halal-related commodities, and services trade, like finance, IT-BPM, and engineering, among others.
We also need to upgrade our tourism infrastructure and services. The New NAIA Corporation’s move to reassign terminals will increase aircraft dispatch from 41 to 48 flights per hour and is expected to help decongest the country’s major air terminals and improve visitor experience. In addition, we will need to improve the transport networks across tourist areas to lower the cost of traveling.
To sustain services sector growth, we must keep up with technological developments, like artificial intelligence (AI). While we expect significant job generation, there may still be job displacements. We will address this by collaborating with industry and the academe for reskilling, upskilling, and life-long learning programs to increase the workforce’s complementarity with AI. The full implementation of the Digital Workforce Competitiveness Act and the National AI Strategy 2.0 are critical policies.
Meanwhile, we strongly support the passage of the Konektadong Pinoy Bill to address the digital divide and support growth in the IT-BPM and digital technologies sectors. Likewise, we continue pushing for the passage of structural reforms included in the government’s Common Legislative Agenda. These reforms aim to improve the economic efficiency, governance, and regulation of critical sectors.
NEDA has recently finished the regional consultations for the Trabaho Para sa Bayan (TPB) Plan, which it will finalize by year-end. The TPB plan will include strategies to encourage investments in priority sectors, improve the employability of our current and future workforce, and enhance labor market governance through job facilitation, skills need anticipation, and social protection to ease job transition.
In conclusion, our focus is clear as we sustain our momentum. Undeterred, the Marcos Administration remains steadfast in its goal of genuine social and economic transformation, leading our nation closer to realizing a matatag, maginhawa, at panatag na buhay for all Filipinos.
Thank you, and good day to everyone.
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