Philippines' real GDP in 3Q 2024 slowed to +5.2% YoY (2Q 2024: +6.4% YoY revised from +6.3% YoY; Consensus: +5.7% YoY; 2023: +5.5% YoY). QoQ it shrank -4.0% (2Q 2024: +6.7%), but seasonally adjusted QoQ posted better growth of +1.7% (2Q 2024: +0.7%, revised from +0.5%). Pick up in private consumption growth was the key YoY GDP growth driver last quarter amid slower public spending and investment. Maybank Investment Bank said the downside to its 2024 growth estimate of +6.0% is still pending review.

Notably, the domestic demand growth rose to +7.4% YoY in 3Q 2024 (2Q 2024: +6.6% YoY, revised from +6.4% YoY; 2023: +5.0% YoY) mainly supported by increase in private consumption (3Q 2024: +5.1% YoY; 2Q 2024: +4.7% YoY revised from +4.6% YoY; 2023: +5.6%) amid moderations in public consumption (3Q 2024: +5.0% YoY; 2Q 2024: +11.9% YoY revised from +10.7% YoY; 2023: +0.6%) and gross fixed capital formation (3Q 2024: +7.5% YoY; 2Q 2024: +9.7% YoY revised from +9.5% YoY; 2023: +8.2%).

Net external demand growth surged (3Q 2024: +32.6% YoY; 2Q 2024: +8.1% YoY; 2023: -0.4% YoY) despite lower exports of goods and services (3Q 2024: -1.0% YoY; 2Q 2024: +4.2% YoY; 2023: +1.4% YoY) and higher imports of goods and services (3Q 2024: +6.4% YoY; 2Q 2024: +4.2% YoY revised from +5.2% YoY; 2023: +1.0% YoY).

Sector growth slowed as agriculture shrank further
Growth moderated across sectors i.e. services (3Q 2024: +6.3% YoY; 2Q 2024: +6.8% YoY; 2023: +7.1% YoY) , manufacturing (3Q 2024: +2.8% YoY; 2Q 2024: +3.9% YoY revised from +3.6% YoY; 2023: +1.3% YoY), construction (3Q 2024: +9.0% YoY; 2Q 2024: +16.1% YoY revised from +16.0% YoY; 2023: +8.8% YoY) and mining (3Q 2024: +1.0% YoY; 2Q 2024: +6.6% YoY revised from +4.8% YoY; 2023: +2.0% YoY) amid further contraction in agriculture (3Q 2024: -2.8% YoY; 2Q 2024: -2.3% YoY; 2023: +1.2% YoY).

Downside to full-year 2024 growth estimate
The weaker-than-expected 3Q 2024 growth means a downside to the current full-year 2024 growth estimate of +6.0% by the bank. Maybank said it is still pending review, especially amid the outcome of US elections, but likely to be around the 9M2024 growth of +5.8%. The house expects the 3Q 2024 growth moderation and a current inflation rate that is at the lower end of the central bank's target range of 2%-4% to prompt BSP to cut the policy rate for the third time by -25bps to 5.75% at its last monetary policy meeting of the year on 19 Dec 2024.