Philippine GDP growth slows but on course for record 7% expansion

Manila: Philippine annual economic growth eased in the third quarter after a sterling first six months, but was still on course for full-year expansion of seven per cent, the highest in over 30 years, the government said yesterday.

The economy grew 6.6 per cent in the third quarter from a year earlier, lower than the median forecast of 6.9 per cent in a Reuters poll as weak exports weighed. In the second quarter, it grew 7.5 per cent from a year earlier, a 20-year-high, and 7.1 per cent in the first quarter.

Unperturbed by the slowdown, the government said the Philippines was still on course for its best economic performance since 1976.

"We can reach seven per cent for the full year," Augusto Santos, the government's economic planning chief, said. "Barring any sudden changes in the external environment, the economy is set for further strong growth."

But economists cast doubt over an uptick in the final three months of the year, undermining hopes for full-year expansion of seven per cent as high oil prices, weak exports and financial turmoil take a toll.

"High crude prices are seen pressuring growth in the fourth quarter, and of course we still have to bear in mind that the risk of another credit/liquidity squeeze looms," said Vishnu Varathan, economist with Forecast. "On its own, that's not disappointing but given that countries such as Malaysia, Indonesia and Singapore have delivered upside surprises, it is somewhat of a disappointment."

Malaysia's economy grew 6.7 per cent in the third quarter from a year ago, beating expectations for a 5.8 per cent jump while Indonesia rose 6.5 per cent in the July-September period from the previous year, ahead of forecasts of 6.2 per cent.

The Philippines grew a seasonally adjusted 0.3 per cent in the third quarter, slowing from the previous quarter's revised 1.8 per cent growth.

The peso, up 14 per cent this year, pared earlier gains but was still stronger at 42.7 against the dollar than Wednesday's close of 42.86.