Government underspending, exports decline resulted in 3.6 to 4% growth last year: Neda

THURSDAY, 26 JANUARY 2012 19:43 CAI U. ORDINARIO / REPORTER

DUE to the government’s underspending and the lackluster growth in exports, the Philippine economy may have grown below its historical average by posting a growth of only 3.6 percent to 4 percent in 2011.

National Economic and Development Authority (Neda) Assistant Director General Ruperto Majuca said the economy may have also posted a growth of around above 3.2 percent to a growth slightly below 5 percent in the fourth quarter.

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“Overall, we expect full year GDP growth to hover around 3.6 percent to 4 percent. However, we underscore that we make these forecasts—both quarterly and yearly—amid an uncertain economic environment, as many of the economic variables are in a state of a flux, and it is difficult to say with certainty where things would eventually settle,” Majuca said.

The Neda official said gross domestic product (GDP) growth last year may have been dragged by the lackluster performance of the agriculture sector which only posted a growth of 2.34 percent due to the typhoon damage incurred by the sector due to Typhoons Pedring, Quiel and Sendong.

Majuca said this will particularly impact fourth quarter growth since farm growth posted a contraction of 2.11 percent due to the typhoons. Palay in the fourth quarter posted a contraction of as much as 8 percent.

Former Budget Secretary Benjamin Diokno said the fourth quarter performance of the agriculture sector was a “big blow” to GDP growth in the quarter. He expects the sharp decline in agriculture growth may not be offset by higher and faster public spending.

“A big blow to the desired GDP growth of 4 percent for Q4 2011. A full year agriculture growth of 2.34 percent implies that the agriculture sector contracted by 3.7 percent in the fourth quarter last year; the desired 3.5-percent growth implies that the sector expanded by 0.9 percent. This sharp decline in agricultural output in the fourth quarter cannot be offset by higher and faster spending in public infrastructure, assuming the latter is true,” Diokno said.

The industry sector has also been weak as evidenced by the contraction in export growth. In the January to November 2011 period, the country’s merchandise exports has posted a contraction of 5.6 percent. In November alone, exports posted a contraction of 19.4 percent, according to the National Statistics Office (NSO).

What supported growth, Majuca said, was the expected growth in the services sector. It can be noted that the sector has been the main source of growth of the GDP due to the robust performance of private services which includes the business-process outsourcing industry.