Philippine economic growth likely to have accelerated in Q3 2018

Philippine third quarter economic growth data is set to be released this week. The GDP is likely to have grown 6.2 percent year-on-year, following the 6 percent growth seen in the second quarter, stated DBS Bank in a research report.

Growth in consumption was stalled by sharply rising inflation that reached a 9-year record at 6.4 percent year-on-year in August with the largest contributors coming from food & beverages and fuel-related expenditure. In October, inflation is estimted to firm up to 6.9 percent year-on-year. For the remainder of 2018, risks to inflation are skewed to the upside as pressure to peso and likelihood of increased oil price are expected to remain.

Given the sharp rise in inflation, consumption was in fact, remain comparatively strong thanks partially to steady remittances and disposable income boost resulting from the personal income tax reform.

“The main driver of growth in 3Q18 was still investment, especially durable equipment, construction and machinery related to infrastructure developments”, said DBS Bank.