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- Category: Top News
- Published on Thursday, 31 January 2013 21:16
- Written by Max V. de Leon | Reporter
THE economy again performed strongly in the fourth quarter of 2012 and registered a 6.8-percent growth, putting the country’s full-year gross domestic product (GDP) growth at 6.6 percent. All major sectors registered creditable growth in the October-to-December period, led by industry at 7.5 percent, services at 6.9 percent and agriculture, hunting, forestry and fishing (AHFF) at 4.7 percent.
For the whole of 2012, services again emerged as the main growth driver with its 7.4-percent expansion, followed by industry, 6.5 percent; and AHFF, 2.7 percent.
Services contributed 4.2 percentage points to the GDP growth in 2012, industry, 2.1 percent; and AHFF, 0.3 percent.
Socioeconomic Planning Secretary Arsenio Balisacan said on Thursday that the 2012 growth was beyond expectation as the Development Budget Coordination Committee (DBCC) only set a GDP target of 5 percent to 6 percent and then proceeded to design a fiscal program that would support that forecast.
“On hindsight, it now appears that the 5-percent to 6-percent target was a bit low, although at the time, this seemed like a fighting target. After all, we were coming from a 3.9-percent growth in 2011, budgetary reforms had just been put in place and others were still to be implemented. There was also the worsening crisis in the euro area, the forecast of mild El Niño and many other such uncertainties,” Balisacan added.
“And now that we have surpassed the target, more than anything, we should really thank the private sector and the general public for trusting us to the point that they were willing to increase their stakes in our economy,” he said.
Balisacan, however, was quick to temper hopes for another overperforming domestic economy in 2013.
He said that there is still no reason to revise the 6-percent to 7-percent official growth assumption for 2013, although the economic managers will continue to monitor the progress on the fiscal side and developments abroad to determine if there is a need to change the forecast.
“We think 6 percent to 7 percent is more realistic given the risks. The global economy is more receptive to expansion now but the risks are quite high,” Balisacan added.
Aside from the external factors, he said, the country also needs to address a number of internal constraints to growth, especially the huge backlog in infrastructure and the high power cost.
According to him, higher investments in infrastructure development and the power sector will put the country’s growth to higher trajectory, or a band of 7 percent to 8 percent.
Balisacan said they actually thought that the services sector, particularly the business-process outsourcing (BPO) industry, will experience a slowdown because of the prevailing global uncertainty. A slowdown in BPO would then shrink the growth in the real-estate sector.
The government also thought that remittances from overseas Filipino workers would drop.
“But these did not happen. For 2013, we are quite confident that the growth we’ve seen in the BPO [sector] will continue. Even if the advanced economies would slow down or stagnate, demand for services will continue,” Balisacan said, noting that the Philippine BPO industry is no longer sensitive to external shocks.
He added that the government and the Bangko Sentral ng Pilipinas are ready to employ instruments to protect the export sector and the outsourcing firms from problems that may arise due to the stronger local currency.
What also contributed to the strong growth in 2012 was the notable increase in the industry sector, particularly in the last two quarters.
Dr. Jose Ramon G. Albert, secretary-general of the National Statistical Coordination Board, said they relied mainly on the production side, rather than the expenditure side, in computing the 2012 GDP results that were announced by Balisacan.
“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,” Albert added.
On the demand side, Household Final Consumption Expenditure (HFCE) 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.
On an annual basis, gross national income (GNI) and net primary income (NPI) from the rest of the world expanded to 5.8 percent and 3.3 percent in 2012 from 3.2 percent and 1 percent, respectively, in 2011.
In the fourth quarter, NPI increased by 0.9 percent in 2012 from 6.2 percent in the same period in 2011, resulting in GNI’s growth of 5.4 percent in 2012 from 4.5 percent in the previous year.
“With the robust economic growth in 2012, per capita GDP accelerated to 4.8 percent from 2.2 percent in 2011 while per capita GNI climbed by 4.0 percent in 2012 from 1.5 percent in 2011. On the other hand, per capita [HFCE], slightly decelerated to 4.4 percent from 4.5 percent. With the 6.8-percent GDP growth in the fourth quarter, per capita GDP, GNI and HCFE rose to 5.1 percent from 2.3 percent, 3.7 percent from 2.8 percent, and 5.2 percent from 4.6 percent, respectively,” Albert said.
Balisacan said that compared with the latest available data from neighboring countries, the 6.8-percent fourth-quarter GDP of the Philippines is higher than that of Vietnam (5.4 percent) and Singapore (1.1 percent). China expanded by 7.8 percent in Q4 2012, while other countries still do not have available data.
“Given the vibrant economic performance, we believe our growth assumptions for 2013-2016 are realistic. The DBCC might convene a meeting in the coming weeks to review our progress, especially in the fiscal front. The crucial issue is the implementation of appropriate policies and measures to ensure that we will sustain this high growth and make it inclusive in the medium term,” he added.
Malacañang officials vowed to work double time to sustain the economy’s upward trajectory after Balisacan confirmed the record 6.8-percent GDP growth in the fourth quarter of 2012 that President Aquino described as “impressive.”
In a briefing also on Thursday, Palace Spokesman Edwin Lacierda credited for the “robust peformance” the services, manufacturing and construction sectors.
Malacanang said that the continued GDP growth is proof of the country’s “ability to sustain the march toward equitable progress.”
Lacierda said that private-sector activity has been enabled by the Aquino administration’s focus on positive reform. “Without doubt, good governance means good economics,” he added.
In a text message to reporters, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said that the better-than-expected GDP expansion was further proof that the BSP’s current policy stance of low interest rates, which favor economic growth, remains appropriate.
“Our recent calculations show that the country’s potential output has also been expanding in line with improvements in capital formation and levels of employment,” he added.
“This gives us more degrees of freedom to adjust our market operations and institute other macroprudential tools as appropriate to ensure that volatilities in financial markets do not translate into excesses in other sectors of the economy,” Tetangco said.
Ahead of Balisacan reporting the unexpected 2012 GDP growth, Euben Paracuelles, a Singapore-based economist at Nomura Holdings Inc., said, “While the economy’s been very reliant on private consumption before, growth is now starting to generate investment from the private sector. It’s going to improve the mix of growth drivers, and if the reform momentum continues, there will still be room for peso-denominated assets to do quite well this year.”
The Philippine peso has risen about 6 percent in the past 12 months, the best performer among 25 emerging-market currencies tracked by Bloomberg. The Philippine Stock Exchange ndex climbed to a record this month.
The BSP last week cut interest rates on its special deposit accounts to 3 percent and kept borrowing costs at a record-low 3.5 percent. The monetary authority targets inflation to average 3 percent to 5 percent until 2014.
Export growth eased to 5.5 percent in November from a 6.1-percent pace the previous month as an uneven global recovery hurt demand. Shipments made up about 20 percent of GDP in 2011.
Since he took office in 2010, Mr. Aquino has increased spending, curbed the budget deficit and reduced corruption in an effort to boost economic growth to as much as 8.5 percent by 2016. A peace agreement with Muslim guerrillas in mineral-rich Mindanao in October is forecast to bring about $1 billion in investment commitments.
(Butch Fernandez and Miguel R. Camus with Bloomberg News)
In Photo: Secretary-General Jose Ramon Albert (left) of the National Statistical Coordination Board (NSCB) and Socioeconomic Planning Secretary and National Economic and Development Authority Director-General Arsenio Balicasan brief the media on the performance of the Philippine economy on the fourth quarter of 2012. The briefing was held at NSCB building in Makati City. (Nonie Reyes)
