Philippines Sees Faster Q4 Growth Amid Easing Weather Woes, Inflation

MANILA, Philippines — The Philippine economy is expected to grow at a faster pace in the fourth quarter as weather disturbances weighing on overall economic activity in the current quarter, according to the Department of Economy, Planning and Development (DEPDev). “We’re a bit more optimistic for fourth quarter and third quarter,” DEPDev Secretary Arsenio Balisacan yesterday told reporters on the sidelines of House of Representatives hearing. He said the fourth quarter performance could be better than the third quarter due to the recent weather disruptions, with severe rains leading to weeks of class suspensions. “Of course that affected our economic activity,” Balisacan said. Philippine Institute for Development Studies president Philip Arnold Tuaño said that a flooding event affects the economy, including demand for goods and inputs for productions. Tuaño said there are studies that estimate a flooding event could affect around 0.6 percent of a city’s gross domestic product. Earlier, Balisacan said that inflation remains a major challenge for the economy. Should inflation continue easing, he said that it is expected to support consumption, the main engine of the economy. Headline inflation eased to 6.1 percent in August from the previous month’s 6.2 percent, but remained elevated and well above the two to four percent target set by the Bangko Sentral ng Pilipinas (BSP). From January to August, inflation averaged 5.2 percent, above the government’s two to four percent target. Balisacan also said earlier that accelerated public infrastructure spending is expected to drive private construction activity and generate multiplier effects across the economy. Economic growth slowed to 2.3 percent in the second quarter, the weakest pace in five years. This brought first half growth to 2.6 percent, below the government’s revised 3.5 to 4.5 percent growth target for the year. While Balisacan is more upbeat on the fourth quarter economic performance, he said that the government is preparing for the severe El Niño expected in the latter part of the year. “We’re doing our best,” he said. To prepare for the El Niño and its effects, Tuaño said early warning systems should be in place to be able to assess the situation and plan the response. He said the government also needs to prepare assistance for affected farmers. “It’s not just social assistance, cash subsidy, but also productivity assistance,” Tuaño said. Information Source: Philstar Business