Economy posts slowest growth in 8 years

(Photo grabbed from Philippine Statistics Authority FB video)

THE government missed its growth target for 2019 as the economy expanded by only 5.9 percent, the slowest rate in eight years, according to Socioeconomic Planning Secretary Ernesto Pernia.

The Philippines has been growing by at least 6.0 percent since 2012, even reaching a high of 7.1 percent in 2013. Under the Duterte administration, the economy expanded by 6.8 percent in 2016 but slowed down to 6.7 percent in 2017 and further to 6.2 percent in 2018.

Pernia, who is also the director general of the National Economic and Development Authority (Neda), on Thursday, January 23, 2020, blamed the economy’s lackluster performance in 2019 on the slowdown in agriculture caused by the El Niño phenomenon and the African Swine Fever outbreak in parts of Luzon as well as on the budget impasse in the first quarter that delayed the implementation of several projects.

The Philippine Statistics Authority (PSA) said the country’s gross domestic product (GDP), the sum of products and services in the country, grew by only 6.4 percent in the fourth quarter of 2019.

With the third quarter growth revised downward to 6.0 percent and the first and second quarter growth rates logged at 5.6 percent and 5.5 percent, the GDP growth rate for the entire 2019 was only 5.9 percent.

This is “the slowest in eight years and slightly below the low end of the 6.0 to 6.5 percent revised target of the government for the year,” Pernia said.

In its report, the PSA said the main drivers of growth in the fourth quarter of 2019 were: trade and repair of motor vehicles, motorcycles, personal and household goods; manufacturing; and construction.

Among the major economic sectors, services posted the fastest growth in the fourth quarter of 2019 with 7.9 percent. Industry grew by 5.4 percent.

Agriculture, hunting, forestry and fishing registered a growth of 1.5 percent.

Net Primary Income (NPI) from the rest of the world and Gross National Income (GNI) had corresponding growths of 4.6 percent and 6.2 percent. On an annual basis, NPI grew by 3.5 percent, and GNI by 5.5 percent.

With the country’s projected population reaching 108.7 million in the fourth quarter of 2019, per capita GDP grew by 4.8 percent.

Per capita GNI and per capita Household Final Consumption Expenditure (HFCE) posted a growth of 4.5 percent and 3.9 percent, respectively.

Meanwhile, Pernia said growth on the demand side was driven by the ramping up of government spending after the budget delay in the first half of 2019.

Public construction significantly increased by 34 percent in the fourth quarter, with the completion of projects of the DPWH payment for the acquisition of right-of-way, and construction of government buildings.

On the supply side, the 7.9 percent growth in the services sector was mainly driven by the acceleration of public administration and defense, trade, and other services.

This was, however, tempered by the slowdown in agriculture.

“In particular, there were production declines in corn, sugar and banana primarily because of delayed planting and harvesting due to the El Nino phenomenon during the first half of 2019,” Pernia said.

Livestock growth also moderated, following the strict implementation and monitoring of movements of live animals across provinces as local government authorities worked to avert the spread of the African Swine Fever.

On the upside, improved output was recorded for coconut and the fishing subsector as higher demand in some regions induced some ponds to resume operations. Good weather conditions also allowed better fish catch and more fishing trips.

While he was grateful to Congress for the early approval of the 2020 national budget bill, Pernia stressed the need to reconfigure budget and disbursement protocols that are more robust.

“We now need to significantly improve the absorptive capacity of government agencies for faster implementation and completion of its key social programs and infrastructure projects,” he said.

“We need to swiftly address issues such as the difficulty in the acquisition of right-of-way, delays in procurement, restrictive auditing rules, and skills shortage,” Pernia added.

He also cited the need to manage inflation and remain vigilant amid the tension in the Middle East, which could put upward pressure on domestic oil prices and other energy-related items. (MVI/SunStar Philippines)


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