Philippine economy expands 6.6 percent in 2012-A A +A
Thursday, January 31, 2013
MANILA (3rd Update) -- Growth in the amount of goods and services produced in the Philippines reached 6.6 percent in 2012, a far cry from the much-criticized 3.9 percent uptick the previous year as signs point to a better 2013 owing to election spending and recovering global economy.
Socioeconomic Planning Secretary Arsenio Balisacan said Thursday that for the fourth quarter of last year, the gross domestic product (GDP) expanded by 6.8 percent, lifted by a strong performance from service industries.
On the supply side of the country's GDP, all sectors performed beyond expectations led by industry, then services and even agriculture.
Industry grew by 6.5 percent, more than twice the growth in 2011 at 2.3 percent. This was backed by the expansion in public and private construction activities and the electricity, gas and water sector.
The services sector also defied forecast growing at 7.4 percent mainly contributed by trade, transport and communication and real estate, renting and business activities, and other services.
Trade grew by 7.5 percent in 2012, more than twice the growth in 2011. Similarly, growth in transport and communication accelerated more than twice, at 9.1 percent compared to 4.3 percent the previous year.
Balisacan also noted gains in other services, particularly, tourism-related subsectors, such as hotels and restaurants, and recreational, cultural and sporting activities. These subsectors grew by 13.3 percent, compared to only 7.1 percent in 2011.
Despite the destructive typhoons in the latter part of 2012, agriculture managed to post a growth of 2.7 percent. The government only expected a 2.2 percent growth from the sector owing to weather disturbances forecast for the year.
On the demand side, household consumption remained as the largest contributor to growth in 2012, growing by 6.1 percent.
This growth, Balisacan said, has been supported by the higher level of economic activity, low and stable inflation, inflows of overseas Filipinos' remittances and subsidy for poor households mainly through the conditional cash transfer program.
From a negative 4.2 percent growth in 2011, exports recovered last year at 8.7 percent.
"However, this growth was actually slower than expected (10 percent target). Perhaps the sector is already feeling the pinch from the combined impact of the global economic slowdown and the appreciating peso," he said.
To make last year's growth sustainable, Balisacan said the government is "serious" in addressing the country's energy requirements, especially in the Visayas and Mindanao.
"Lest the current growth momentum stall once again, we should ensure that power supply is sufficient to support the anticipated expansion in investment. It is vital to harmonize policies and guidelines among concerned agencies on the exploration, development, utilization and conservation of natural resources for energy projects," he said.
Balisacan added that longer-term rehabilitation measures on areas affected by calamities should be given attention in response to the environmental and economic threats of climate change.
Meanwhile, risks to growth include the sputtering economies in the European Union, a major trading partner, and oil price increases due to a higher global demand for petroleum products coming from advanced and emerging economies, and the instability in the Middle East.
Locally, part of the costs of the widespread flooding and landslide and extensive damage to agriculture brought by typhoon "Pablo" last December will continue to be felt in the first quarter of 2013.
Balisacan said the country's economic growth in the fourth quarter of 2012 was higher than other neighboring countries, except China.
Vietnam grew by 5.4 percent and Singapore by 1.1 percent, while China expanded by 7.8 percent. Other countries have yet to issue their official data.
Balisacan admitted that when the Development Budget Coordination Committee (DBCC), an interagency body that sets the macroeconomic targets, set the 5 percent to 6 percent growth target at the latter part of 2011, they considered it as a "fighting target" as reforms had just been put in place that time coupled with the worsening crisis in the Euro Area; the forecast of mild El Nino, and many other uncertainties.
"And now that we have surpassed the target, more than anything, we should really thank the private sector and the general public for trusting us to the point that they were willing to increase their stakes in our economy," he said in a press conference.
Balisacan said that in spite of the higher than expected economic growth, the government would not be lulled to complacency.
He vowed that the Aquino administration will put in place policies and implement programs that will sustain economy's growth over the medium term.
"Despite the more positive global outlook in 2013, we continue to remain vigilant of the global and domestic risks to growth," he added.
He expressed optimism that the growth assumption of 6 percent to 7 percent for this year could be attainable.
The DBCC might convene a meeting in the coming weeks to review the progress, especially in the fiscal front, he added.
"The DBCC might convene a meeting in the coming weeks to review our progress, especially in the fiscal front. The crucial issue is the implementation of appropriate policies and measures to ensure that we will sustain this high growth and make it inclusive in the medium term," he said.
Aside from the election season from February to June, infrastructure projects to be rolled out by the government will also boost the economy in 2013, University of Asia and the Pacific economist Cid Terrosa told Sun.Star. (Virgil Lopez/SDR/Sunnex)