Wednesday, March 20, 2019

Economy slows down in 2nd quarter

MANILA. In this photo taken on July 25, 2018, an old lady earns a living by cleaning plastic bottles for recycling on a sidewalk in Ermita, Manila. (Alfonso Padilla/SunStar Philippines)

THE Philippine economy slowed down in the second quarter of 2018, with gross domestic product (GDP) growing only 6.0 percent, the Philippine Statistics Authority (PSA) reported Thursday, August 9.

The figure, which is lower than the 6.6-percent growth rate logged in the first quarter of the year, is less than government expectations and a notch lower than the low end of the 7 to 8 percent government growth target for 2018.

To meet the government's annual growth target, Socioeconomic Planning Secretary Ernesto Pernia said the economy would have to expand by 7.7 percent in the second half of the year.

He blamed the slowdown partly on the government's policy to protect the environment which caused the temporary closure of Boracay Island, the closure of several mining pits and the imposition of an excise tax on non-metallic and metallic minerals, and the lower freshwater fish catch at Laguna Lake following the stricter enforcement of aquaculture regulations.

Pernia said these were the result of policy decisions "that are expected to promote sustainable and resilient development."

The temporary closure of Boracay, a top tourist destination in the country, "partly made a dent on the economy with growth in exports of services slowing to 9.6 percent in the second quarter from 16.4% in first quarter."

The closure of several mining pits resulted in a 10.9 percent contraction in the mining and quarrying sector.

"But, I emphasize, all measures should ensure sustainable and long-run growth for the economy. These policy decisions were prudent and judicious," Pernia said in a press conference Thursday.

He said, however, that the Philippines remains one of the top three best-performing economies in Asia, after Vietnam's 6.8 percent growth and China's 6.7 percent growth. The Philippines still grew faster than Indonesia’s 5.3 percent.

Presidential Spokesperson Harry Roque Jr., in a separate press conference, said the government was saddened by the latest GDP figure, but stressed that it was not a cause for alarm.

He assured that the Duterte administration would double its efforts to meet its growth target.

"Of course, we're also saddened by the fact that we failed to meet targets," Roque said. "We will do everything to meet them. If we don't, we'll find out why and we'll try to achieve further targets for the rest of the year."

The Palace official, however, said the government is not apologetic for Duterte's desire to protect the environment.

"The President, of course, will exercise the powers of the state known as police powers to protect the environment. And he has given further priority — higher priority to the protection of the environment — and he makes no apologies for it," he said.

"If GDP will further fall because of the desire of the President to protect the environment, so be it. We're investing in the future and not just in the present," he added.

With the 6.0 percent GDP growth outturn in the second quarter and the revised 6.6 percent first quarter GDP, Pernia said GDP growth for the first six months of the year is at 6.3 percent.

Industry growth was slower at 6.3 percent as manufacturing softened on the back of strict regulations of controlled chemical and chemical products, coupled with the high rates charged by shipping companies for transporting chemicals.

Pernia also raised concerns over the agriculture sector's flat growth.

"We are also gravely concerned about the almost stagnant output of the agriculture sector and this supports our premise that the main reason behind the high inflation is the gross deficiency in the domestic production of food, which was not augmented by imported goods especially rice," he said.

"Palay, corn, sugarcane and mango harvests for the quarter were dismal. Coconut including copra, livestock and poultry production all reported weak output," he added

Pernia called on the Department of Agriculture to urgently conduct a comprehensive review and reform of policies and programs that restrict access to land and the use of land, access to technology and extension services, access to finance, and access to markets.

He also called on the Department of Trade and Industry (DTI) and the Philippine Competition Commission to assess the market environment, including the possible presence of cartels and incidence of smuggling.

Pernia further reiterated the need for tariffication of rice imports "to address food supply issues and their consequent impact on inflation."

"It will reduce the policy uncertainty in rice trade, and hopefully, encourage more productive investments in the sector," he said.

Inflation hit an all-time high of 5.7 percent in July due to the higher prices of food and non-alcoholic beverages, which the National Economic and Development Authority (Neda) traced to supply constraints. (Marites Villamor-Ilano and Ruth Abbey Gita/SunStar Philippines)


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