The Philippine economy grew at the slowest pace in more than a year last quarter, with damage from Super Typhoon Haiyan further crimping the outlook for full-year expansion before a reconstruction boost.
Gross domestic product rose 7 percent in the three months through September from a year earlier, compared with a 7.6 percent gain in the previous quarter, the National Statistical Coordination Board said in Manila today. The median estimate in a Bloomberg News survey of 21 economists was 7.1 percent.
An economic resurgence led by President Benigno Aquino has won the Philippines its first investment-grade scores from Moody’s Investors Service, Fitch Ratings and Standard & Poor’s this year. While increased spending has sheltered the nation from global turbulence, the government has said growth will probably ease this quarter after Haiyan destroyed roads, farms, towns and an entire city in the Visayas group of islands.
“The storm will likely damp growth momentum in the fourth quarter and until the first half of 2014,” said Trinh Nguyen, an economist at HSBC Holdings Plc in Hong Kong. Still, the nation’s fundamentals remain favorable, as “inflation is benign, credit is cheap, and domestic demand is strong,” she said.
The Philippine Stock Exchange Index (PCOMP) climbed 1 percent, gaining the most in six weeks as Asian shares rose on U.S. data. The peso fell 0.1 percent to 43.735 per dollar as of 11:39 a.m. local time, according to Tullett Prebon Plc.
Damage from the Nov. 8 typhoon, which left at least 5,500 people dead and displaced 3.5 million, is estimated at $6.5 billion to $14.5 billion, according to catastrophe modeling firm AIR Worldwide. The local economies of the affected areas in central Philippines, which account for about 12.5 percent of GDP, may contract 8 percent to 10 percent next year, Finance Secretary Cesar Purisima said Nov. 12.
The central bank has held its benchmark interest rate at a record-low 3.5 percent since Oct. 2012, and cut the rate on its special deposit accounts three times this year. While initial indications are that there is no need to adjust the monetary-policy stance, Bangko Sentral ng Pilipinas has space to respond, Governor Amando Tetangco said last week, after announcing higher inflation forecasts for this year and next.
The Philippine economy may expand between 4.1 percent and 5.9 percent this quarter, Economic Planning Secretary Arsenio Balisacan said Nov. 14, commenting on the effects of the storm. While the government’s full-year growth target of 6 percent to 7 percent is “very doable,” economic managers will meet today to review goals for next year, he said today in a briefing.
Rebuilding in typhoon-affected areas may take three to four years, and the government plans an initial budget of 38.8 billion pesos ($887 million) to cover a year, Balisacan said.
Aquino plans to increase the budget to a record in 2014 and boost spending on roads, classrooms and ports. San Miguel Corp., Ayala Corp. (AC) and Megawide Construction Corp. are investing in projects including airports and railways.
The economy expanded 1.1 percent in the third quarter from the previous three months, today’s report showed. Private consumption rose 6.2 percent from a year earlier, while government spending gained 4.6 percent.
The industry sector grew 8.2 percent last quarter from a year earlier, compared to a 10.3 percent pace in the previous three months. Construction growth slowed to 4.7 percent.
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