GDP Growth Still Understated – Domingo

By BERNIE CAHILES-MAGKILAT

November 28, 2012, 5:51pm

Trade and Industry Secretary Gregory L. Domingo, who earlier projected of a 7 percent or above 2012 GDP growth this year, said the country’s GDP growth has been understated saying majority of the FDIs (foreign direct investments) that have been poured into new projects of foreign investors have not been fully captured.
Domingo said this as the country’s GDP continued to bring surprises with a 7.1 percent growth in the third quarter this year.
Domingo said that GDP should be at 8 percent for this year if only the entire FDI inflows have been captured. He noted that only $1.2 billion of FDIs out of $8 billion have been formally reported to the Bangko Sentral ng Pilipinas.
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The BSP has a hard time getting the total FDI inflows following the relaxation of the country’s foreign exchange laws. Domingo even tried to track the FDIs of at least five major investors in the country and found out these have not been reported. The FDI report is based on the results of a BSP survey, which has only 20 percent respondents.
Because of this situation, he said, overall GDP growth this year, based on the growths in the past three quarters, is likely to end up at 6.5 percent. But next year, Domingo said, should be 7 percent and above already.
Likewise, Domingo said that the 7.1 percent third quarter GDP was understated because the baseline in the third and fourth quarters last year was really low because of the impact of the Japan disasters and the flooding in Thailand that affected the country’s automotive and electronics exports.
In addition, exports of electronics has been down because of the 95 percent drop in  exports in the automotive sector following the reclassification of this sector thus pulling the entire electronics exports to a negative 7 percent.
Without this reclassification, the overall electronics exports would still be in the negative but at very minimal decline.
“But the third and fourth quarters this year have very strong growth trajectory,” he said.
He cited the influx of major manufacturing projects with ongoing plant construction as the main factor that would ensure sustained growth in the next several years.
Developers of industrial parks have informed Domingo of various plants construction and strong take up by investors.
With these new investments, he expect that electronics exports would be strong in 2013 to 2014 even with a weak global electronics market because the local industry has already expanded its market reach.