The Philippine economy remained on track to post Southeast Asia’s quickest expansion this year after a stellar third-quarter performance, although doubts persist amid softer consumer spending and a decline in investment.

Gross domestic product in the three months through September rose 5.9% from a year earlier, the Philippine Statistics Authority said Thursday. That’s the first acceleration since the 7.7% pace clocked in the year-ago quarter. It’s also faster than the 4.7% median estimate in a Bloomberg survey and 4.3% growth in the second quarter.

The performance keeps the Philippines on track to be Southeast Asia’s fastest growing economy this year and the next as predicted by the International Monetary Fund. An improving inflation outlook has been widely expected to encourage business expansions and help fuel consumption, while the government’s push on infrastructure programs will help create more jobs and spur economic activity.

The Philippine peso held on to its gain after the data, rising 0.3% to 55.89 per dollar. Stocks also rose.

The government has been targeting to grow the economy by 6%-7% in 2023. Output in the current quarter needs to expand by 7.2% from a year ago to attain at least the lower end of that range, said Economic Planning Secretary Arsenio Balisacan.

What Bloomberg Economics Says...

While household spending remains relatively firm, momentum continues to cool. What’s more, capital spending has fallen off. This, in combination with softer inflation in October and a rebound in the peso, suggests Bangko Sentral ng Pilipinas will leave interest rates unchanged at its next meeting on Nov. 16.

—Tamara Mast Henderson, economist

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“While we have progressed quite a lot in the third quarter in so far as public spending is concerned, there is still so much room for improving spending,” Balisacan said.

Capital Economics senior Asia economist Gareth Leather said he doesn’t expect the third-quarter “strength to last as high interest rates and weaker global growth lead to renewed economic weakness in the near term.”

--With assistance from Tomoko Sato and Karl Lester M. Yap.

(Adds economists’ comments, details throughout.)

Author: Manolo Serapio Jr. and Ditas Lopez