‘We did it!’

Published on Monday, 03 December 2012 17:56

Written by Manny B. Villar / Entrepreneur

AS a businessman, I felt there was some weakening of the economy in the third quarter, which has been traditionally considered as a weak quarter. So I was pleasantly surprised by the report from the National Statistical Coordination Board (NSCB) that the economy actually grew by 7.1 percent, more than twice the 3.2-percent growth in the same quarter last year.

Socioeconomic Planning Secretary Arsenio M. Balisacan noted that the Philippines grew the fastest among members of the Association of Southeast Asian Nations (Asean). The third-quarter growth in terms of gross domestic product (GDP) also beat the market median forecast of 5.4 percent and brought the Philippine economy’s growth for the first nine months of 2012 to 6.5 percent.

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Most of the Philippines’s peers in Asean suffered lower growth in the third quarter of 2012 compared to the same period last year. Indonesia, which placed second to the Philippines, grew by 6.2 percent in the third quarter of 2012, slightly lower than its 6.49-percent growth in the same period in 2011. Malaysia grew by 5.2 percent, down from 5.8 percent; and Vietnam by 4.7 percent, down from 6.07 percent.

Singapore’s economy shrank by 0.3 percent compared to a 5.9-percent growth year-on-year. Thailand posted a turnaround with a 3.0-percent growth in the third quarter of 2012 compared with a negative growth of 0.5 percent a year ago. Even China, Asia’s economic powerhouse, saw its GDP growth slowing down to 7.7 percent from 9.1 percent in the third quarter of 2011.

The Asian Development Bank (ADB), in its latest update on Asia’s outlook, lowered its growth forecast for China to 7.7 percent for 2012 and 8.1 percent for 2013, down from 8.6 percent and 8.7 percent, respectively. Singapore, according to news reports, now estimates full-year growth for 2012 at 1.5 percent, the lower end of its 1.5 percent to 2.5-percent target as a result of the third-quarter performance.

The lower forecast anticipates more problems for the export-driven economy because of the continuing slowdown in major markets like Europe. The slower growth of the economies of Malaysia and Thailand was also attributed to lower demand from export markets.

The ADB expects the Philippine economy to grow by 5.5 percent this year and by 5.0 percent next year. The economy’s performance in the third quarter, however, may compel the regional development institution to raise its forecast for the Philippines.

The Development Budget Coordinating Council has opted to retain the official growth target of 5 percent to 6 percent for this year, but the National Economic and Development Authority has issued a statement saying the economy is well on its way to surpassing the target.

What made the Philippine economy’s performance was that it was broad-based, on the demand side and the expenditure side. On the demand side, the agriculture, hunting, fishery and forestry sector grew by 4.1 percent in the third quarter of 2012, up from 2.2 percent a year ago; industry grew by 8.1 percent, up from 0.1 percent; and services grew by 7.0 percent, up from 5.2 percent. On the expenditure side, government final consumption expenditure grew by 12.0 percent, up from 8.9 percent; household final consumption expenditure grew by 6.2 percent, slightly lower than 7.4 percent a year ago.

Among other expenditure components, construction jumped by 24.8 percent, a huge turnaround from a contraction of 8.6 percent year-on-year. Merchandise exports also posted a significant turnaround, from a contraction of 14.8 percent in the third quarter of 2011 to a 6.7-percent growth this year.

The growth in services, on the demand side, and household and government expenditures, plus construction, on the expenditure side, indicates that consumption is still driving the Philippine economy. Consumption is fueled by remittances from overseas Filipinos and business-process outsourcing, which have both defied expectations of a slowdown.

In addition, our economy continues to enjoy strong confidence from consumers and investors, which may be credited to the continuing improvement in the country’s image in terms of good governance and the high ratings of the national leadership.

In sum, we have done it! We reached the magic number (7.0 percent), and our task now is to hold on to it, keeping in mind that only a sustained high- growth rate will lift many of our people from the clutches of poverty.

(To be continued)

For comments/feedback e-mail to: mbv_secretariat@yahoo.com. Readers may view previous columns at www.senatorvillar.com.