MANILA, Philippines – Philippine economic growth slowed in the third quarter to 6.5 percent, new data showed Thursday, but analysts said consumer and investor confidence were growing under the nation's new president.
The year-on-year expansion for July-September was down from 7.9 percent in the previous quarter, when the economy was artificially boosted by a government spending spree to coincide with national elections in May.
Storms that cut agricultural output – destroying rice crops – also contributed to the slowdown, according to the government's economic planning department.
However a 4.2-percent rise in consumer spending helped offset weakness in other sectors, suggesting Filipinos are optimistic about the direction of the economy under President Benigno Aquino III.
"The good news is that consumption has picked up and most of the other indicators seem to indicate robust consumption spending moving towards the end of the year," Aquino's spokesman, Ricky Carandang, told reporters.
Aquino, who took office on June 30 after winning the presidential elections in a landslide, has said one of his top priorities is to improve investor confidence in a national economy long afflicted by corruption.
His anti-graft efforts and restrained fiscal policies appear to be working, according to Neeraj Jain, head of the Philippine country office of the Asian Development Bank.
"The mood has gone up and... the economy is doing better than expected," Jain told Agence France-Presse, adding the third quarter growth topped the bank's forecast in September of 6.2-6.3 percent.
He said there had been a positive response to a pitch Aquino made this month for $3.4 billion worth of investment in infrastructure. Aquino promised a level and graft-free playing field for foreign companies.
"The investors' conference... improved the mood on the Philippines. It was very well organised and the government came out with very clear policy statements," Jain said, but added this was not the only reason for optimism.
"This administration has shown exemplary fiscal prudence in the last four months. It must continue to show that fiscal prudence."
In another signal of growing confidence, Jain pointed to the decision by international ratings agency Standard and Poor's this month to raise the Philippines' sovereign credit rating by a notch to "BB".
Manny Aquino, a senior economic policy researcher at the House of Representatives, also said investors liked the government's priority of wooing investors to upgrade crumbling roads, erect new airports and build rail lines.
"He's treading the right path because the lack of infrastructure is one of the bottlenecks to productivity," said Aquino the economist – no relation to the president.
However, state revenues must rise substantially to support government spending that would lead to higher growth over a longer period, he said.
Economic Planning Secretary Cayetano Paderanga said the government was optimistic about the short-term prospects for the economy, and that full-year growth would exceed the official target of 5-6 percent.
Aside from consumer spending, he cited double-digit growth in durable equipment investment, which would suggest business activity will pick up amid benign inflation and low interest rates.
Revised data announced by the economic planning ministry showed gross domestic product expanded at 8.0 percent in the first half, up from 7.9 percent.
It brought the nine-month GDP growth to 7.5 percent.
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