Phl economy grows 7.2%, second fastest in Asia

MANILA, Philippines - The Philippines recorded the second biggest economic expansion in Asia with a growth of 6.5 percent in the fourth quarter of 2013, bringing the year’s gross domestic product (GDP) to 7.2 percent.

Socioeconomic Planning Secretary Arsenio Balisacan, who is also director general of the National Economic and Development Authority (NEDA), said the country remains one of the best performing economies in the Asian region in the fourth quarter of 2013, next to China, which grew by 7.7 percent.

He said it was a “remarkable turnout” considering the 2013 target of only six to seven percent given the challenges the country faced, particularly the disasters that struck central and southern Philippines in the fourth quarter.

“Indeed, growth could have been better had we not been perturbed by various disasters that hit the country such as the Bohol earthquake, the Zamboanga siege and Typhoon Yolanda,” he said.

Balisacan said they are sticking with their projection of 6.5-to 7.5-percent growth for this year.

“We are optimistic that the Philippine economy will remain strong in 2014, especially that the outlook on the global economy is becoming more favorable and as the domestic economy remains robust,” he said.

He said the 2014 growth projections are consistent with global trends.

Higher expectations

Balisacan noted that the International Monetary Fund (IMF) and the World Bank (WB) both have higher growth expectations for the global economy.

The IMF, he said, sees global activity growing by 3.7 percent this year and 3.9 percent in 2015, while the WB projects growth at 3.2 percent this year and 3.4 percent in 2015. The Asian Development Bank sees the region growing at 6.2 percent this year.

“With such indications of recovery from the global economic crisis, we believe the Philippine economy, particularly the industry sector, is in a very good position to take advantage of wider export markets, as the government continues to implement reforms to reduce the cost of doing business in the country,” he said.

Services and industry sectors

The NEDA chief attributed the outstanding performance in 2013 to a stronger supply side as the services and industry sectors continue to be the drivers of economic growth.

He said the services sector contributed 3.6 percent of the real GDP growth in the fourth quarter of 2013. The industry sector, on the other hand, registered a growth of 2.8 percent and agriculture with 0.1 percent. Manufacturing, trade, finance, and real estate mainly propelled fourth-quarter growth on the supply side. 

The 6.5-percent expansion of the services sector was driven largely by the strong demand for communications, land and air transportation, and storage and services incidental to transport.

Balisacan said increased air traffic in the last quarter of 2013 was a result of additional flights and destination of the country’s leading airlines, number of passengers and cargo for tourism and relief operations after Yolanda.

He said the financial sector also came in strong in the fourth quarter with a growth of 9.9 percent.

“A stable business environment, a manageable inflation rate of 3.7 percent – leaning towards the low end of the target range – and low interest rates, as well as aid from other countries for those affected by typhoon Yolanda, have induced an increase in financial activity,” he said.

He said the 5.4-percent growth in other services was mainly driven by education and services, health and social work and community services. 

He said tourism also drove the sector’s strong performance. For 2013, tourism gross value added reached P748.3 billion, 15 percent higher than in 2012.

In the industry sector, manufacturing served as the frontrunner, posting double-digit growth of 12.3 percent in the fourth quarter of 2013, more than twice the growth it exhibited in the same period of 2012, at 5.5 percent.

Chemical and chemical products which grew at triple digit – 124.5 percent in the fourth quarter following another triple digit growth of 133.5 percent in the third quarter– was top performer.

Manufacturing grew significantly by 10.5 percent, maintaining a growth rate of above 9.5 percent since the first quarter of 2013.

On the demand side, growth was driven by household consumption, which contributed 4.2 percent and net exports, which contributed 1.6 percent.

The export sector also continued to post a positive growth in the fourth quarter at 6.4 percent, lower than the 8.6 percent in the previous year, but still a sign of improvement after its lackluster performance in the first half of 2013.

Merchandise exports increased by 6.2 percent mainly due to the strengthening of the global manufacturing sector in line with the recovery of the world economy.

Exports of services, on the other hand, grew by seven percent from a negative 0.6 percent growth in the same period last year.

Expansion of business process outsourcing firms and the influx of tourist arrivals in the country were the main sources of growth for this expenditure account.

Setbacks

Meanwhile, construction had the biggest setback in the fourth quarter of 2013, which contracted by 0.8 percent due to stricter rules imposed on real estate lending in compliance with prudential regulations.

Government spending also declined by 5.2 percent, down from the 9.5-percent growth recorded in the fourth quarter of 2012 due to lower disbursements in Personnel Services and Maintenance and Other Operating Expenditures.

However, government spending increased by 8.6 percent.

Total imports also slowed down by 1.9 percent during the last quarter from eight percent in the same period of the previous year. – With Zinnia dela Peña, Delon Porcalla