Philippine full-year economic growth decelerates in 2018, domestic demand slows down in Q4

Philippine economy expanded in the fourth quarter. The economy grew 6.1 percent year-on-year, bringing full-year growth in 2018 to 6.2 percent year-on-year as compared with 6.7 percent year-on-year in 2017. The deceleration in full-year growth shows a larger drag from net exports rather than softer domestic demand.

Domestic demand growth eased in the fourth quarter to 6.1 percent from third quarter’s 9.5 percent. Domestic demand added 6.9 percentage point to overall growth. At the component level, private consumption rose 5.4 percent year-on-year in the fourth quarter. Growth in gross fixed capital formation moderated to 9.8 percent year-on-year, upon a sharp slowdown in machinery and equipment investment. Public consumption decelerated but continues to be elevated at 11.9 percent year-on-year.

Softer investment growth and domestic demand in general was also reflected in slower import growth. Meanwhile, export growth held up comparatively well in the quarter. Therefore, the drag from net exports reduced considerably to 0.8 percentage point in the fourth quarter from 4 percentage points in the third quarter.

Meanwhile, on the supply side, industry growth picked up to 6.9 percent year-on-year in the fourth quarter, while services growth eased to 6.3 percent year-on-year. The agriculture sector rebounded smartly, expanding 1.7 percent year-on-year and adding 0.2 percentage point to overall growth, noted ANZ in a research report.