Acting secretary of socioeconomic planning, Augustos Santos, said the growth was based on the performance of the agriculture, industry and services sectors with domestic demand as well as government policy and programme intervention acting as the catalysts.
"It is very welcome news, though this does not come as a surprise given the strong growth registered in the past two quarters," Santos told local media.
Favourable weather and the department of agriculture's Quick Turnaround Scheme (QTS) were able to help propel the agriculture, fishery and forestry sectors, which account for a fifth of the economy, as it grew 5.6% in the third quarter as opposed to a moderate 3.6% in the previous quarter. This year, the QTS saw increased investments, particularly in irrigation facilities, expansion programmes, credit facilitation and knowledge dissemination.
The industry sector achieved a 6.1% growth rate, a 1.2% year-on-year increase, mostly due to better performance by the manufacturing and construction sectors.
The services sector, which represents nearly 50% of total GDP, was up 7.2% from last year's 5.8%. Trade, private services, transportation, communication and storage were among the main contributors to the expansion. However, the success and rapid rise of the business process outsourcing industry was the driving force behind the service sector's growth.
Commenting on the third quarter performance, economist Solita C Monsod told local media that substantial growth in investment or capital formation during the period was a strong signal expansion is becoming investment led, which is "more sustainable" than growth based on consumption.
For the three-month period from July to September capital investment grew by 8.9%, higher than the 2.1% increase recorded last year.
A general improvement in household incomes, better labour market conditions and a low inflation rate helped increase consumer spending by 5.6% during the period and government consumption rose by 8.3% as the administration continues to implement new projects, particularly in infrastructure.
The results put the country well on track to surpassing the government's prediction for annual GDP growth of between 6.1% and 6.7%. The previous two quarters saw growth of 7.1% at the beginning of the year and a 20-year high of 7.5% in the second period.
"With growth generally spilling over into the next quarter as domestic demand strengthens, the Philippine economy should be able to surpass the projected [...] target," Santos told reporters.
He added, "We can easily reach 7% for the full year. Barring any sudden changes in the external environment, the economy is set for further strong growth in the fourth quarter."
While analysts and economists remain optimistic the Philippines can achieve GDP growth of 7% for the full year, there is some concern that rising oil prices, weak exports and political uncertainty may put that figure in jeopardy.
"Inflationary pressures arising from the volatility of the oil market must be vigilantly monitored as this may be carried forward and pose downward pressure on future growth prospects," said Santos.
The export market is an area of great concern. With the appreciation of the peso, exports rose only 4.85% in the first nine months. The Philippine Export Association has already revised its original export growth forecast down from 10% to between 4.4% and 5.5%. As the US economy continues to weaken these latest figures are not expected to improve.
The impact of political uncertainty and its effect on the overall economy are more difficult to predict. On the heels of another bid to overthrow the Arroyo administration, which took place on November 29 as rebel soldiers led by Senator Antonio Trillanes occupied a Makati City hotel in an attempt rally support, it does not bode well for the image of the country and for attracting foreign investment.
That said, this is certainly not the first time such an incident has occurred and private sector leaders, while disappointed, are not too concerned.
Sammie Lin, president of the Philippine Chamber of Commerce and Industry, told local media the occupation of the hotel was "unfortunate" as it comes at a time when the economy is starting to pick up. However, "Compared to previous incidents, this is not that big [...] The business community is not that worried," he said.