MANILA: Weak government spending and sluggish exports likely slowed Philippine economic growth in the third quarter from the previous three months, but the country remains on course to be one of Asia's fastest growing economies this year.
Seasonally adjusted quarter-on-quarter growth may have slightly eased to 1.5% in July-September, a Reuters poll showed, from 1.8% in the second quarter, but the forecast is sharply higher than the first quarter's 0.4% growth.
"The persistent slowdown in government spending remains the main dampener on growth. In fact, third-quarter public spending is even lower than that of second quarter," said Eugenia Victorino, economist at ANZ in Singapore.
The government is still struggling to address slow spending, blamed on a corruption scandal and slow-moving bureaucracy, with year-to-date expenditures still below target.
However, beyond the third quarter, low interest rates and benign inflation are likely to help sustain growth.
Compared with a year earlier, the economy likely grew 6.3%, which would be its fastest year-on-year rise in GDP this year, buoyed by strong domestic demand and favourable base effects.
On Wednesday, the Philippine government revised its annual economic growth for the second quarter up to 5.8% from the previously announced 5.6%.
Record low inflation, due to cheaper fuel prices and adequate rice supply, and strong remittances inflows from Filipinos working abroad have helped power private consumption, which makes up more than 70% of the economy.
Bangko Sentral ng Pilipinas governor Amando Tetangco said last week the central bank has room to keep interest rates steady near 1-1/2-year low of 4%, where it has been since September 2014.
Economists expect public investments to move faster ahead of an election ban on infrastructure projects in February and that should help offset downside risks from a protracted El Nino dry weather pattern and sluggish exports.
"National elections (in May) will help solidify the growth momentum for the Philippines to regain the title of fastest growing economy in Asean in the coming quarters," said Emilio Neri, economist at Bank of the Philippine Islands in Manila.
For the full year, the economy is expected to grow 5.7%, the same poll showed, among the strongest economies in Asia but lower than the government's 7%-8% target. - Reuters
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