We are pleased to report to you that the Philippine economy grew by 7.0 percent this third quarter. This is the fifth consecutive quarter that growth is at least 7.0-percent, buoyed by the expansion in consumer spending, higher business and consumer confidence, favorable interest rates, stable inflation, strong inflows of overseas Filipinos remittances, high inbound tourism, and an optimistic domestic economic outlook. Our country remains as one of the best performing economies in the region for the quarter, second only to China, and outpacing Indonesia, Viet Nam, Malaysia, and Thailand. Moreover, growth for the first nine months of this year reached 7.4 percent from the same period in 2012, still above the 6-7 percent target that the Development Budget Coordination Committee or DBCC has set for 2013. This implies that the Philippine economy only needs to grow between 2.0 and 5.7 percent in the fourth quarter of 2013 in order to attain the DBCC growth target for the whole year.
Needless to say, we need to remind ourselves that we need to work even harder to ensure that our gains are robust even as we face various threats and risks.
The best example of how disasters can set back economic gains is the performance of the agriculture sector, where output marginally increased by 0.3 percent. On the other hand, the trend in the fisheries sector demonstrates that adaptation can yield positive outcomes. The bottomline, however, is to increase the resilience of families, for which income diversification is key.
On a positive note, there are evidences that we are on track with respect to rebalancing the economy towards an investment- and industry-driven growth from a consumption-led one. Capital formation, which grew by 15.6 percent, has sustained its double-digit growth since the first quarter of this year. Investment in durable equipment jumped to a 22.3-percent growth, driven by expectation of higher demand for transport services particularly air transport, supported by our campaign to promote tourism as a major driver of economic growth. On the supply side, we note the high growth of the industry sector, 8.2 percent from 7.1 percent for the same period last year. This is backed by the manufacturing sector’s further expansion to 9.7 percent for the period, which is supported by the 135.2-percent growth in chemical and chemical products. It should also be noted that the manufacturing subsector appears to have inched towards diversification and away from previous concentration on food manufactures. The next strong contributors to growth during the period were basic metal industries, furniture and fixtures, and non-metallic mineral products.
Despite the good performance in the third quarter, however, the combined effects of the powerful earthquake that hit Central Visayas; Typhoon Santi that swooped down Central Luzon, and Typhoon Yolanda that had a devastating impact in Eastern Visayas, Central Visayas and parts of Region IV-B, are expected to shave off a part of growth in the fourth quarter. We also realize that this adverse impact could linger unless we immediately implement reconstruction efforts. To date, NEDA estimates that the combined impact of these disasters could reduce the full-year 2013 real GDP growth rate by 0.5 percentage points. Thus, the recovery and reconstruction plan has to be systematically executed and managed well.
Yesterday, we presented to the President a set of critical immediate actions which form part of the plan for the rehabilitation and recovery of the areas affected by Typhoon Yolanda. The discussions focused on the need to provide more secure shelter, revive economic activity, and restore public infrastructure and facilities. It is important to complete these critical immediate actions as soon as possible knowing the social costs involved if we delay. The actions will also create the enabling environment for private sector to come in and accelerate economic recovery.
Let me also state that the recovery and rehabilitation plan is a product of inter-agency collaboration, with some help from our development partners. Even then, we realize that this should be considered a work in progress as different government agencies continue to conduct damage and loss assessments, gathering more detailed information and validating available data. The comprehensive plan includes immediate, short-term, medium-term as well as long-term interventions to help the affected families and local economies get back on their feet. The President’s instruction is for us to “build back better.” Through unified and well-coordinated efforts, we will once again prove the world our utmost resilience amid this adversity.