No surprise from Philippines's 3Q15 GDP report

Philippines's GDP growth came in at 6.0% (YoY) in 3Q15, slightly below the forecast of 6.2%. Given that 2Q15 GDP growth has been revised up to 5.8%, full-year GDP growth is still set to come in at 5.7%. At this juncture, GDP growth seen inching higher to 6.1% in 2016. 

Government consumption growth spiked to 17.4% (YoY), fastest in 3 years. This is hardly surprising, given that budget spending jumped almost 20% in 3Q15. Meanwhile, gross fixed capital formation (GFCF) growth rose 9.3% in the period, pretty much where full-year growth is likely to be as well. Note that on sequential basis, investments are growing twice as fast as the average pace seen in the last 10 years. 

Private consumption growth remains robust at 6.3% (YoY) in 3Q15. Given the election effect next year, private consumption growth is expected to remain circa 5.5-6.0%. This is likely to offset any drag on public investment, amidst concerns of possible delays to government projects due to the 2016 elections. 

Perhaps one little surprise was that manufacturing GDP growth actually ticked up to 5.6% (YoY) in 3Q15 from 4.7% previously. This is despite a disappointing goods export growth in 3Q15. Note also that we have seen a bigger than expected drag from net exports in the period, due to some moderation in exports of services as well. It is interesting that taking out net exports from the equation, GDP growth would have been a stellar 8%, fastest since early-2013.