Good sign

The robust economic growth in the third quarter was truly surprising, with most analysts expecting the gross domestic product to expand by only 6.6-6.8 percent during the period. The actual 7.1-percent GDP growth for July-September was the fastest in Asia thus far, eclipsing China’s third-quarter growth rate of 6.7 percent and Vietnam’s 6.4 percent. (India, which has also been posting record-high growth rates, has yet to report its third-quarter economic results.)

It was one big positive development that prompted President Duterte’s people to lay claim to it as the new administration’s achievement. To hear the President’s officials speak, it was as if the economy were in the doldrums and rebounded only when the administration took over. (July-September was the first quarter of the Duterte administration.) Actually, the Philippine economy had been growing above 6 percent since the third quarter of 2015 on strong domestic demand—fueled by the billions of dollars in remittances from overseas Filipino workers and the low inflation regime. The annual inflation rate has stayed below the Bangko Sentral ng Pilipinas’ target range of 2-4 percent since May last year, while interest rates have similarly remained steady, thus aiding consumer spending.

The Philippine economy grew by nearly 7 percent in the first quarter of 2016, making it the second fastest-growing among Asian countries, after India’s 7.9 percent. The Philippine Statistics Authority (PSA) said the GDP, or the value of goods and services produced by a country, expanded by 6.9 percent from January to March, faster than China’s 6.7 percent and Vietnam’s 5.7 percent. It was then the Philippines’ highest quarterly GDP gain since the second quarter of 2013.

The Philippines was again Asia’s second fastest-growing economy in the second quarter with its 7-percent expansion for the April-June period, faster than China’s 6.7 percent but lower than India’s 7.1 percent. Helping boost growth in the second quarter was spending ahead of the May 9 presidential election. The PSA noted that investments, which jumped by 27.6 percent in the second quarter, made the biggest contribution to second-quarter growth, followed by household consumption, which rose by 7.3 percent.

During the third quarter, GDP growth was bolstered by strong construction and infrastructure investment and upbeat consumer spending (car and home purchases, for example) fueled by low inflation and interest rates. Agriculture also managed to reverse its decline, thus aiding in the overall economic growth performance for the quarter. But it was mostly private-sector. While government spending on infrastructure—mainly through the Department of Public Works and Highways, which expedited work on many of the long-delayed road and drainage projects—ramped up in the third quarter, the Duterte administration continued to underspend by about P60 billion during the quarter.

The outlook for the Philippine economy remains bright. Astro del Castillo, an analyst at securities firm First Grade Holdings, admitted that the third-quarter growth figure was a surprise for the financial markets, but affirmed the private sector’s longstanding view that economic fundamentals remained intact despite the political noise since

Mr. Duterte’s rise to power. Thus, even with the global headwinds mainly from the risk associated with a Trump presidency in the United States and dismal economic performances in Europe, the Philippines will continue to post robust growth in the coming years.

In fact, many private economists have upgraded their forecasts for Philippine growth through 2017 following the surprising 7.1-percent economic expansion in the third quarter. As Economic Planning Undersecretary Rosemarie Edillon aptly put it, “our economy’s strong growth in the third quarter is a very good sign of things to come.”