MANILA (Reuters) – The Philippines’ annual economic growth slowed in the third quarter as renewed COVID-19 restrictions crimped demand, giving the central bank more reason to keep interest rates at a record low for a while.
Although the Southeast Asian economy had recovered from five straight quarters of contraction in the three months to June, it lost momentum in the September quarter after the government reimposed strict curbs to contain a resurgence in coronavirus cases.
Gross domestic product expanded by 7.1% in the July-September period from a year earlier, the statistics agency said on Tuesday, slower than the upwardly revised 12% expansion in the previous quarter, but above the 4.8% forecast in a Reuters poll.
On a quarter-on-quarter basis, the economy grew 3.8% in September period.
Household consumption rose 7.1% in the third quarter from a year earlier, slightly slower than previous quarter’s 7.3% growth, while government spending increased 13.6%, rebounding strongly from a 4.2% slump in April-June.
Unemployment rose to an eight-month high of 8.9% in September following the reimposition of strict lockdown measures in August in the capital region and nearby provinces.
By sector, industry and services posted growth of 7.9% and 8.2%, respectively, while agriculture, forestry and fishing declined 1.7% partly due to the effects of bad weather and African swine fever outbreaks.
Despite the third-quarter slowdown, Socioeconomic Planning Secretary Karl Kendrick Chua said this year’s growth could still hit or even exceed the top end of the 4.0%-5.0% target, as a decline in COVID-19 cases and rise in vaccination rates paved the way for a further reopening of the economy in the last quarter.
But as the economy was still operating below potential, economists expect the central bank to leave its benchmark rate at a record low of 2.0% at its last two policy meetings for the year despite faster inflation.
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