Philippine economy beats market expectations, expands 6.6% in 2012

By SIEGFRID O. ALEGADO, GMA News

Published January 31, 2013 10:04am

(Updated 02:18 p.m.) The Philippine economy grew 6.6 percent last year—beating the expectations of the market, lending institutions and even the government itself—driven by the services, trade, real estate and construction sectors.

In a briefing on Thursday, NSCB chief Jose Ramon Albert announced that output for the fourth quarter hit 6.8 percent, pushing the full-year gross domestic product (GDP) beyond the government's 5 to 6 percent growth expectations for 2012.

The full-year 2012 figure was significantly higher than 2011's 3.7 percent and was slightly higher than the National Economic and Development Authority's (NEDA) 6.5 percent GDP growth expectation.

It was also higher than the market's media forecast of 6.2 percent as shown in a GMA News Online poll.

“The increase was fueled by the robust performance of the services sector led by trade and real estate, renting and business activities as well as the substantial improvements of manufacturing and construction,” the National Statistical Coordination Board (NSCB) noted in a separate statement.

“On the demand side, household final consumption expenditure together with government spending, the recovery of capital formation and the remarkable performance of the external trade contributed to the healthy growth of the economy in the fourth quarter and the whole year of 2012,” it added.

“What is particularly important to note is that while growth was initially driven by government stimulus, it is now being increasingly driven by private sector activity, including investments which grew by 8.7 percent in 2012,” Malacañang noted in a separate statement.

“This means growth is becoming more sustainable from a fiscal and macroeconomic perspective. Private sector activity has been enabled by the Aquino administration's dedication to positive reform. Without doubt, good governance means good economics,” the Palace added.

Vietnam and Singapore outpaced

Despite external headwinds from the fiscal problems in the US and in Europe, Philippine growth surpassed expectation, Socioeconomic Planning Secretary Arsenio Balisacan said at the same briefing.

“It now seems the growth target of 5-6 percent was a bit low, but at the start it seemed like a fighting target,” the Economic chief noted.

Balisacan also noted last year's Philippine output outpaced those of Southeast Asian peers Vietnam (5.4 percent) and Singapore (1.1 percent), citing official data.

Most Asian countries have not released their 2012 GDP numbers as of this posting.

Philippine output “was fueled by the robust performance of the services sector led by trade and real estate, renting and business activities as well as the substantial improvements of manufacturing and construction,” said Albert.

The services sector grew by 7.4 percent, up from 5.1 percent in 2011. Industry also leaped by 6.5 percent last year from the 2.3 percent in the same comparable period, but growth in agriculture was not as impressive at at 2.7 percent.

NSCB data showed that public construction rebounded by 32.4 percent growth from a 31.8 percent decline in 2011, while private construction was up by 8.6 percent from 4.5 percent.

“In the last two quarters, we are seeing an increasing pace in industry sector that diminishes the contribution of consumption,” said Balisacan.

Albert noted that on the demand side, household consumption and public spending provided a springboard for “the healthy growth of the economy in the fourth quarter and the whole year of 2012.”

However, Balisacan noted household consumption grew by a slower 6.1 percent from 6.3 percent.

Government spending, meanwhile, grew 11.8 percent from 1.0 percent. In a separate statement, Finance Secretary Cesar Purisima noted the role of private sector partnership in boosting the economy.

"Aquinomics is all about the public and the private sectors working together. Despite the uncertainty in the global economy, this public and private partnership allowed us to grow way above our historical trend," he said, citing the jump in private sector construction.

"We are committed to strengthen our fiscal position, intensify our investments in infrastructure and in our people, and enhance our business environment. With the help of the private sector, we hope to do as well in 2013," he added.

Sustaining growth

"The administration’s vision for the economy has always been to ignite a virtuous cycle of growth and empowerment—to enable business and enterprise to flourish; to open doors of opportunity for each citizen; and to invest in them so that they can truly take hold of their own destinies," Malacañang noted.

Citing that the “conservative” 6 to 7 percent growth goal for 2013 is “likely to stay,” Balisacan said the Cabinet policy-setting Development Budget Coordinating Committee may meet in the coming weeks to review the targets.

“As of now, we don't have a very strong reason to revise that, but we will continue to monitor the progress of the fiscal situation of the country and the global economy,” he added.

The Economic chief said the “euro area remains a major concern” for the economy.

Balisacan also noted that the challenge for government remains sustaining economic expansion and having robust growth trickle down to the grassroots. “It is our immediate task to put in place policies and implement programs that will sustain our economy’s growth over the medium term

“We shall continue planting the seeds of structural transformation in our economy to make it more investment- and industry- led,” he added.

Apart from putting social safety-nets as such conditional cash transfer and the universal healthcare program, Balisacan said eradicating poverty entails pushing for a strong industry sector that “will mean more jobs and employment opportunities of high quality.”

"The continued growth of our GDP is proof positive of our ability to sustain a united march forwards along the straight path toward equitable progress," according to Malacañang. "Rest assured that while our administration is encouraged by these successes, we will continue to work even harder to maintain our economy’s upward trajectory," it added — VS/TJD, GMA News

Tags: phleconomy, gdp