MANILA -- The Philippine economy grew 6.9% in the third quarter despite a deceleration in consumer spending, the country's main driver, the government reported on Thursday.
The third quarter performance brought the country's gross domestic product growth to 6.7% in the first nine months, within its goal of 6.5-7.5%. The result makes the Philippines the second fastest-growing major economy in Asia after Vietnam, which grew 7.46% in the third quarter.
Consumer spending has slowed for two straight quarters. Rising food and oil prices are discouraging Filipinos from spending more, Socioeconomic Planning Secretary Ernesto Pernia said on Thursday. Inflation in the third quarter rose to 3.1% on the year, from 2% in the third quarter of 2016.
Pernia said consumption would accelerate in the coming months. "We are likely to see an uptick in consumer spending considering the holiday season that is coming," he said. Filipinos usually splurge in December over the Christmas season, when they receive year-end bonuses and incentives.
Consumer spending, buoyed by remittances from overseas Filipino workers, is responsible for nearly two thirds of total output.
Pernia said a planned tax reform program for next year should lift consumer spending, with reduced taxes for lower and middle-income earners translating into more disposable income.
"So imagine if both public and private spending are on a roll. We are likely to see the economy steadily going on an upward trajectory," Pernia said.
Public spending further gained momentum in the third quarter, growing 8.3% on the year after government employees received higher salaries and the government's ambitious infrastructure program started to pick up. The national government plans to spend up to 930 billion pesos ($8.3 billion) on infrastructure, equivalent to 5.3% of GDP this year.
"We are now seeing a sustained improvement in government spending," Pernia said.
President Rodrigo Duterte has touted his tenure, which began in 2016 and lasts for six years, as the Philippines' "golden age of infrastructure". His "build, build, build" program aims to spend 8.4 trillion pesos and raise infrastructure spending to 7.4% of GDP by 2022.
Public construction in the third quarter grew 12.6% on the year and helped offset the measly 0.6% growth in the private sector.
"With private construction exhibiting a downtrend for two consecutive quarters, the government's infrastructure program will open more opportunities for the private sector to expand business activities...and increase their capital spending," Pernia explained.
Net exports contributed 1.2 percentage points to total output. Pernia said the Philippines' improving relations with China had opened up opportunities for exporters of fruit and semiconductors. The number of Chinese tourists visiting the Philippines has also risen significantly.
On the supply side, the services sector remained the major contributor to overall GDP. Industry grew fastest at 7.5%. Japanese investment bank Nomura said it saw the Philippine economy growing further to 7% in the last three months of 2017.
Going forward, Pernia cited upward price pressures in oil prices and natural calamities as key risks. However, Pernia said the economy should sustain its momentum until the end of the year.
"On balance, the growth of fourth quarter GDP will be higher or at least match the third quarter's performance," Pernia said.