The Philippine economy grew by a disappointing 5.2% in the third quarter of 2024, the slowest pace in five quarters, as severe weather and reduced government spending took a toll on growth. This decline follows a revised 6.4% growth in the second quarter and falls short of the government’s 5.7% forecast. The National Economic and Development Authority (NEDA) acknowledged the slowdown as the economy grapples with typhoons and funding constraints.
Agriculture and Construction Hit by Typhoons
The agriculture sector saw a 2.8% decline year-on-year, reversing modest growth in the previous year. NEDA Secretary Arsenio Balisacan noted that El Niño and seven typhoons, including Severe Tropical Storm Kristine, had caused an estimated P15.8 billion in agricultural damage. The successive storms disrupted supply chains and delayed harvests, especially in the crops subsector, contributing to the weaker GDP performance.
In the construction industry, private construction grew by 11.9%, though public construction slowed to 3.7%, impacted by administrative delays and weather-related disruptions. Balisacan highlighted that these disruptions stalled infrastructure spending, a key driver for sustained economic growth.
Consumption Holds Steady Amid Declining Exports
Household consumption grew by 5.1%, driven by easing inflation and recent rate cuts by the Bangko Sentral ng Pilipinas (BSP). Finance Secretary Ralph Recto emphasized that lower inflation and increased purchasing power buoyed consumer spending. However, gross capital formation rebounded to 13.1% due to investments in durable equipment and private construction growth.
On the downside, exports contracted by 1%, primarily impacted by a sharp decline in electronics exports, which dropped 17.9%. Balisacan attributed this to inventory adjustments in the semiconductor industry and a slowdown in global demand.
Looking Ahead: Optimism Tempered by Global Risks
Economic officials remain cautiously optimistic about achieving more robust growth in the fourth quarter, spurred by holiday spending and recovery efforts in typhoon-affected areas. However, Pantheon Macroeconomics and Capital Economics economists warned that challenges such as a strong U.S. dollar, weakening export demand, and possible tariffs under U.S. President-elect Donald Trump could further impact growth.
The BSP has signaled a potential 25-basis-point rate cut in December to support the economy, which would lower the benchmark rate to 5.75% by year-end. Despite external risks, policymakers expect consumer spending and infrastructure projects to boost economic resilience in the final quarter.
Jaja has a degree in journalism and took classes in international law and business communication. Her career spans roles at prominent international media outlets, including International Business Times, Celebeat and Delightful Philippines. As a news editor, Jaja covered a wide range of beats, including legal, business, economy, cryptocurrency, personal finance, gaming, technology, and entertainment.