‘Global gloom won’t dampen PHL growth’
In a briefing on Thursday, Socioeconomic Planning Secretary Ernesto M. Pernia said the government is “very confident” that GDP growth for 2017 would fall within its 6.5-percent to 7.5-percent target.
Pernia made the statement after the Philippine Statistics Authority (PSA) announced that the economy grew 6.8 percent in 2016. GDP in the fourth quarter alone expanded by 6.6 percent.
“Overall, given this growth in 2016, we believe that attaining the target of 6.5 percent to 7.5 percent for 2017 is highly likely,” Pernia said.
former Neda Secretary Cielito Habito told the BusinessMirror that he supported the government’s view on the economy, adding that strong domestic economy will continue to boost growth this year.
Habito said the domestic economy, which is driven by consumption and, more recently, investment, has saved the country from falling prey to external risks. The uncertainties in the global economy have given export-oriented countries difficulties in recent years.
Pernia credited the government for its foresight, which saved the Philippines from encountering trade problems related to the withdrawal of the United States from the Trans-Pacific Partnership (TPP).
“The global slowdown has not impacted the Philippines as much as it did our highly export-dependent neighbors. Add our growing consumption and the increase in government spending on infrastructure and you still have the corresponding stimulus for sustained growth of around 7 percent ahead,” Habito said.
However, University of Asia and the Pacific School of Economics Dean Cid Terosa said the shortfalls in public infrastructure spending, coupled with “external headwinds”, would make it difficult for the government to meet its growth targets.
For 2017, Terosa had projected GDP growth to fall within 6 percent to 6.5 percent. He noted that there was “no guarantee” that the government’s planned infrastructure spending, which is over P850 billion this year, would be realized.
Terosa added that shifts in Washington’s policies will also affect the country. The US is a major trade partner of the Philippines and most of the clients of business- process outsourcing firms in the country are based there.
“Also, the growth of remittances from overseas Filipino workers has followed a downward trend, although it will continue to support consumption spending,” he said.
Despite posting its slowest quarterly growth in the fourth quarter, the Neda said the Philippines is still among the fastest-growing economies in emerging countries in Asia.
In the fourth quarter alone, Pernia said Philippine economic growth was the third best in the region, after China’s 6.8 percent and Vietnam’s 6.7 percent. For the whole of 2016, he said the country’s GDP growth could be the second fastest after China’s 6.7 percent. Vietnam only grew by 6.2 percent last year.
The Neda chief also said the country’s full-year growth in 2016 allowed the country to increase its seven-year moving average real GDP growth to 6.3 percent, the highest since 1978.
Pernia attributed the country’s economic growth to the government’s construction spending, which grew 23 percent in the fourth quarter. “This is attributed to high consumer confidence, modest inflation and interest rates, and improving labor-market conditions.”
PSA data showed that private consumption growth slowed to 6.3 percent in the fourth quarter, from 6.5 percent in October to December 2015. Full-year growth, however, remained robust at 6.9 percent, higher than the 6.3 percent recorded in 2015.
Among the major economic sectors, the PSA said Industry had the fastest growth at 7.6 percent, higher than the previous year’s 6.5 percent. Services declined by 7.4 percent, compared with the 7.8- percent growth in the fourth quarter of 2015. PSA data also showed that agriculture declined further by 1.1 percent. In the same period of the previous year, it dropped by 0.2 percent.
Pernia said this was mainly due to the ill effects of typhoons Karen and Lawin, which hit the country in the fourth quarter of 2016.
New growth leader
After years spent languishing behind its neighbors, the Philippines is finally catching up with its fellow Asian tiger economies as it posts some of the fastest-growth rates in the world.
With the World Bank forecasting expansion of more than 6 percent for eight years until 2019— unparalleled in the nation’s history—the Philippines is mimicking gains seen in Malaysia and Thailand in the 1990s as they industrialized. Growth in the Philippines was 6.8 percent in 2016, data released on Thursday showed.
The region’s former powerhouses are giving way to newcomers, like the Philippines and Vietnam, whose younger populations and rising middle classes help lure manufacturers. While President Duterte has alienated some with his anti-US rhetoric and deadly drug war, his ambitious $160-billion infrastructure plan and push for greater investment from China, Russia and the Middle East are strengthening the outlook.
“We are seeing a transformation to a stronger, more developed economy,” said Frederic Neumann, cohead of Asian economic research at HSBC Holdings Plc. in Hong Kong. “Recent administrations worked hard to ensure macroeconomic stability, which serves as its anchor.”
January 26, 2017