Philippines full-year GDP hits an 8-year low

GDP declined by 5.9%, the lowest since 2011.

The Philippines’ real GDP grew 6.4% YoY in Q4 2019, ending the full-year GDP growth with a decline at 5.9% lower in 2019, according to a report by UOB research. This marked the country’s lowest growth rate since 2011.

The YoY increase in Q4 was driven by robust government spending, where the country’s government sped up its infrastructure programme, following the budget impasse in 1H 2019, noted the report. Construction activities saw a growth of 11.8% for the quarter.

The boost was also attributed to sustained household consumption. Public consumption growth almost doubled to 18.7% YoY in Q4, marking the faster expansion in 31 quarters.

All sectors pencilled in positive expansion in Q4, led by the services sector. The services sector recorded the highest annual growth rate in 31 years at 7.9%, adding 4.4 points to overall Q4 GDP growth.

The manufacturing sector came in as the second biggest GDP growth contributor, with a 3.7% increase. The gains were accounted to the persistent gain in production of food, chemical products, and electrical and electronics goods particularly electrical machinery and equipment, said the report.

Meanwhile, the annual growth of the construction sector remained robust at 10.7% YoY, resulting from the government’s efforts to escalate the implementation of public infrastructure projects, noted the report. Activities in the public construction sub-sector surged 33.8% YoY during the quarter, while construction activities by private sector slowed to 5.5% YoY.

The mining sector staged a growth rebound to 2.1% on the back of a strong recovery in nickel and stone output, whilst the agriculture, hunting, fishery and forestry sector expanded at a more moderate pace by 1.5% reflecting a decline in forestry sub-sector with 14.5%, and the growth slowdown in agriculture sub-sector at 1%.

UOB sights that the country’s economy will hold up its expansion above 6.0% throughout 2020 amidst residing global downside risks. Domestic drivers such as infrastructure projects, overseas remittance inflows, and accommodative monetary policy will continue to underpin the growth outlook, read the report. UOB maintains its 2020 full year growth forecast at 6.5%.