PHL economy grows 7.8% in first quarter, overtaking China and Indonesia

The economy grew by 7.8 percent in the first quarter of the year from a revised 6.5 percent a year earlier, driven by private and public consumption, the National Statistical Coordination Board (NSCB) said Thursday.

 

At a press briefing, NSCB Secretary General Jose Ramon Albert said, “This is the highest growth posted in any quarter under the Aquino administration.”

 

The Philippines overtook China's 7.7 percent and Indonesia's 6 percent growth in gross domestic product (GDP) in the first three months of the year, National Economic and Development Authority (NEDA) chief Arsenio Balisacan told reporters during the briefing.

 

“This growth of 7.8 percent exceeded expectations, including my own,” said  Balisacan.

Election spending also caused an uptick in GDP in the period, but “hefty construction growth” of 33.7 percent was the main booster to growth, Emilio Neri Jr., economist at the Bank of the Philippine Islands, noted in an e-mail message to GMA News Online.

 

The first quarter GDP is well above government's 6 to 7 percent growth goal for this year, and is well over the 6 percent median forecast in a GMA News Online poll of private sector economists. 

 

Output in the fourth quarter of 2012 was at a revised 7.1 percent, bolstering full-year GDP to 6.8 percent.

 

“The robust growth was boosted by the strong performance of manufacturing and construction, backed up by financial intermediation and trade,” the NSCB noted in a separate statement.

 

On the demand side, increased consumer and government spending shored up by increased investments in construction and durable equipment contributed to the highest quarterly GDP, according to NSCB.

 

Specifically, industry expanded by 10.9 percent, while services sustained growth above 7 percent. Agriculture, which was formerly a drag on growth, managed to expand by 3.3 percent.

 

Projecting the population to reach 96.8 million in the first quarter of 2013, NSCB said “per capita GDP grew by 6.1 percent while per capita GNI (gross national income) grew by 5.3 percent and per capita Household Final Consumption Expenditure (HFCE) grew by 3.4 percent.” 

 

'Remarkable' growth

 

Calling the growth “remarkable,” Neri said the first quarter output which came from a strong base “demonstrates that the Philippine economy has achieved a much higher growth trajectory.” 

 

Latest data “debunk the belief that growth last year was only due to base effects and indeed we are in a higher growth trajectory,” Balisacan said.

 

“We will be doubly impressed if we can confirm that the public sector played a big part in this as it appeases concerns that the current administration has a tendency to underspend,” Neri noted. 

 

In the first quarter, the government disbursed P58.1 billion worth of infrastructure and capital outlay, up 50.1 percent from a year earlier. 

 

Tepid merchandise trade numbers were not much of a drag to first quarter growth, Neri said, given the “limited dependence the economy has on export receipts.”

 

Sustaining growth, creating jobs

 

Neri said the Philippines should continue to post “solid growth numbers on the spending side, driven mainly by consumption spending and durable equipment outlays while construction and manufacturing activity on the production side.”

 

This was helped largely by low inflation and low interest rates, he said.

 

Inflation in the first quarter remained within the central bank's 3 to 5 percent target, allowing monetary authorities to keep policy at an expansionary stance. 

 

“For drivers sustaining the growth, we'll focus on sectors that generate employment like manufacturing and industry,” Balisacan said. He added that the government is keeping the  6 to 7 percent growth goal for now.

 

NEDA officials admitted that creating more quality jobs remains a challenge for the government. 

 

Balisacan called on the private sector to help the government create quality employment by investing in “key sectors,” saying that job creation is “our greatest challenge.” 

 

Quality employment refers to high productivity jobs mainly in manufacturing and agro-industrial sectors, said NEDA Deputy Director General Emmanuel Esguerra.

 

The downside risk to growth includes sluggish economic recovery in the West, excessive capital inflows and natural disasters, Balisacan noted. — VS/TJD, GMA News