MANILA, Philippines - The Philippine economy expanded by a stellar 6.6% in 2012 from the lackluster 3.9% growth in the previous year, the National Statistical Coordination Board (NSCB) reported on Thursday.
"With the robust growth of the services sector led by trade, and real estate, renting and business activities, accentuated by the sturdy performances of manufacturing and construction, the country's gross domestic product grew by 6.8% in the fourth quarter of 2012, paving the way for the annual GDP to post a broad-based growth of 6.6%," NSCB Secretary General Jose Ramon G. Albert said.
The 2012 economic growth exceeded market expectations and even breached the 5% to 6% target earlier set by the government.
Socioeconomic Planning Secretary Arsenio Balisacan earlier has said last year's growth may hover around 6.5%, while President Benigno Aquino III earlier this week noted "all of us will be impressed" with the 2012 growth figures.
The International Monetary Fund and the World Bank both forecast the Philippine economy to have grown by 6% last year.
A Bloomberg survey of analysts pegged the Philippines' 2012 growth at 6.3%, while a Reuters poll put it at 6.4%.
Stellar economic growth
at 6.6%
Palace: Good governance means good
economics
By Riza T. Olchondra, TJ Burgonio
Philippine Daily Inquirer
ECONOMIC TEAM
President Aquino (right) predicts an impressive Philippine economic growth of
more than 6 percent in a speech during the 40th anniversary of Neda on Tuesday.
He is shown with (from left) former Neda Director General Cayetano Paderanga,
Neda Deputy Director General Rolando Tungpalan and current Neda chief Arsenio
Balisacan. Lyn Rillon
Living up to President Aquino’s advance
information that the numbers would impress, the Philippine economy expanded 6.8
percent in the fourth quarter of 2012, lifting full-year growth to 6.6 percent.
The figures that government economists and
statisticians announced Thursday beat their targets and analysts’ expectations.
Socioeconomic Planning Secretary Arsenio
M. Balisacan said that on hindsight, the government’s 5- to 6-percent growth
target for the past year seemed conservative.
Median forecasts from the World Bank and
other institutions were 5.9 percent for the fourth quarter and 6.4 percent for
the full year.
Compared with the latest available data
from other Asean countries, the Philippines’ fourth quarter growth in gross
domestic product (GDP), the value of goods produced and services rendered in a
given period, was higher than Vietnam’s 5.4 percent and Singapore’s 1.1 percent.
China’s economy expanded by 7.8 percent in
the last quarter. Other countries still do not have available data for the full
year.
Unsurprisingly, the GDP announcement by
the National Economic and Development Authority (Neda) and the National
Statistical Coordination Board (NSCB) was trending on Twitter, earning kudos
from industry groups, such as the Makati Business Club.
Private economists, however, were not as
impressed, noting that the lingering question was whether such figures could be
sustained and translated into better incomes for many Filipinos.
Expectedly, Malacañang cheered the
“exceptional” growth rate, trumpeting it as proof of the country’s ability to
move toward “equitable progress” on a policy of good governance.
“It is a resounding affirmation of the
Aquino administration’s fiscal strategy, backed as it is by our robust
macroeconomic fundamentals and more importantly, the principles of good
governance,” Budget Secretary Florencio Abad said in a statement.
Presidential spokesperson Edwin Lacierda
attributed the economic growth to private sector activity goaded by the
administration’s policy reforms.
While it was initially driven by
government stimulus, the economic growth was now increasingly being driven by
private sector activity, including investments, which grew by 8.7 percent in
2012, Lacierda said in a briefing.
“This means growth is becoming more
sustainable from a fiscal and macroeconomic perspective. Private sector activity
has been enabled by the Aquino administration’s dedication to positive reform.
Without doubt, good governance means good economics,” he said.
Not
quite impressed
Benjamin E. Diokno of the University of
the Philippines School of Economics, however, was not impressed.
Diokno said that under President Corazon
Aquino, the economy grew by 6.8 percent in 1988 after a weak growth in 1987,
while under President Gloria Macapagal-Arroyo, the economy grew 6.7 percent
in 2004 after a weak growth in 2003, and again by 7.6 percent in 2010, after a
near recession in 2009.
“I agree it’s a strong growth. Considering
its long-term growth potential and growth higher than 6 percent might be
considered strong. Is it sustainable? That remains to be seen. We’ve seen this
kind of growth before and they were not sustained. Is it inclusive? I’m afraid
not,” he said.
Diokno said the contribution of
agriculture to GDP continued to shrink, posting the lowest growth among the
three major sectors.
“Based on the October labor statistics,
the recent growth may be characterized as labor-shredding growth. Close to 1
million jobs were lost,” Diokno said. Most Filipinos still depend on agriculture
and related sectors for a living.
NSCB Secretary General Jose Ramon G.
Albert said industry and services led economic growth on the supply side
(sources of goods and services).
On the demand side (where goods and
services are used), growth was still largely driven by household consumption and
external trade.
Industry grew 6.5 percent, more than twice
the 2.3-percent growth in 2011.
The Neda said the expansion in public and
private construction, and the electricity, gas and water sector led the growth.
In the first two quarters of last year, it
was public construction that took up the slack in construction, but the private
sector took over beginning the third quarter.
“This is what we mean by the private
sector upping its stakes in the economy,” said Balisacan, who is also the Neda
director general.
“Equally remarkable was the growth in the
electricity, gas and water sector, growing by 5.1 percent, a far cry from its
growth of 0.6 percent in 2011. No doubt this was in support of the increased
economic activity in 2012,” he said.
The service sector also beat expectations
with a 7.4-percent growth from trade, transport and communications, real estate,
renting and business activities and other services.
Trade grew by 7.5 percent in 2012, more
than twice the figure in 2011. Growth in transport and communications
accelerated at 9.1 percent compared with 4.3 the previous year.
“We had expected a slower growth for the
real estate, renting and business activities, which includes the IT-BPO, owing
to the continued slowdown in the global economy. And yet the sector still
managed to grow faster than expected at close to 8 percent,” Balisacan said.
There were also notable gains in other
services, particularly, tourism-related subsectors, such as hotels and
restaurants, and recreational, cultural and sporting activities. These
subsectors grew 13.3 percent, compared with only 7.1 percent in 2011.
Balisacan said he was also pleasantly
surprised with the growth in agriculture (2.7 percent).
“We only expected a 2.2-percent growth
from the sector owing to weather disturbances forecast for the year,” he said.
In the first two quarters of 2012, it
looked like the sector would underperform with a contraction in the fisheries
sector. However, the turnaround happened beginning the third quarter and
especially in the fourth quarter when the sector grew by 4.7 percent.
“We are also pleased to note that the
output in the fishery sector had gone up by 3.3 percent, from eight consecutive
quarters of contraction if not stagnant growth,” Balisacan said.
Household consumption
On the demand side, household consumption
remained the largest contributor to growth in 2012, growing by 6.1 percent.
Although the growth was slower than the 6.3 percent in 2011.
Balisacan noted that the growth had been
on the increase coming from 5.1 percent in the first quarter up to 6.9 percent
in the fourth.
Growth was supported by the higher level
of economic activity, low and stable inflation, inflows of overseas Filipinos’
remittances and government subsidy mainly through the conditional cash
transfers.
“Note, however, that remittances of
overseas Filipinos increased by 8 percent in dollar terms, but only by 2.8
percent in peso terms in October and November 2012,” Balisacan said.
Exports of goods recovered with a growth
of 8.7 percent for the year from a contraction of 4.2 percent in 2011. Exports
of services grew by 9.8 percent, more than twice the growth the previous year.
“However, this growth was actually slower
than expected. Perhaps the sector is already feeling the pinch from the combined
impact of the global economic slowdown and the appreciating peso,” Balisacan
said.
Fixed capital formation also improved to
8.7 percent in 2012 as growth in investments for public and private construction
and durable equipment registered significant increases.
In spite of the country’s achievements in
2012, Balisacan said the government would not be “lulled” into complacency.
“It is our immediate task to put in place
policies and implement programs that will sustain our economy’s growth over the
medium term. We shall continue planting the seeds of a structural transformation
in our economy to make it more investment and industry-led. This, in turn, will
mean more jobs and employment opportunities of high quality for Filipinos, thus
ensuring that growth is inclusive and benefits all sectors of society,” he said.
Raise
productivity
Cid L. Terosa of the University of Asia
and the Pacific said the growth level of at least 6 percent could be maintained
as long as the Philippines kept building up productivity.
So far, Terosa said, the fourth quarter
and full year 2012 growth rates were impressive but the question remained
whether those numbers could translate into better income for many.
“Employment and continuous structural
changes are keys to economic growth over the medium-term,” he said.
