Growth exceeds goals, GDP hits 6.5%

Published on Wednesday, 28 November 2012 22:32

Written by Max V. de Leon | Reporter

The economy surpassed expectations anew as it grew by 7.1 percent in the third quarter of the year, putting the country’s gross domestic product (GDP) for the first three quarters at 6.5 percent—much higher than the official upper-end forecast of 6 percent for the whole year.

The government is now optimistic the country would surpass its economic growth target for the year.

“We posted the fastest economic growth within Asean [Association of Southeast Asian Nations]. We are well on our way to surpassing our growth target of 5 percent to 6 percent this year and this economic expansion continues to be broad-based, as almost all sectors posted higher year-on-year growth rates,” said Socioeconomic Planning Secretary Arsenio M. Balisacan, who is also director general of the National Economic and Development Authority (Neda).

Making it sweeter, according Balisacan, is the fact that the economic expansion was achieved amid uncertainties in the global scene brought about by the looming fiscal cliff in the United States and crisis in Europe.

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“Overall, the Philippines’s third-quarter GDP growth was the highest in Asean.  Indonesia came in second with 6.2 percent, followed by Malaysia [5.2 percent], Vietnam [4.7 percent], Thailand [3.0 percent] and Singapore [0.3 percent]. On the other hand, China registered a 7.7-percent GDP growth in the period,” Balisacan said in presenting to the media the highlights of the Philippine economic performance for the third quarter.

By percentage point, agriculture, hunting, forestry and fishing (AHFF) contributed 0.44 to the GDP growth, with industry contributing 2.55 and services 4.08. Industry, however, posted the highest growth in the third quarter at 8.1 percent, followed by services, 7 percent and AHFF, 4.1 percent.

Balisacan said household spending contributed more than half of the growth on the demand side, supported by slower movement of prices, as headline inflation averaged 3.5 percent from July to September 2012, and the continuous improvement in consumers’ confidence.

The 4.2-percent growth in overseas Filipino workers’ remittances in peso terms also contributed to higher household spending.

The exports sector also performed well, Balisacan said, with merchandise shipments abroad growing 6.7 percent and services exports increasing by 7.6 percent in the July-to-September period.

In the third quarter of 2011, merchandise exports fell by 14.8 percent, while the services side only grew by 5.3 percent.

“While contractions were experienced in the export receipts of semiconductors and electronic data-processing equipment, both items significantly contributed to imports performance, which likewise rebounded to 8.3 percent in the third quarter from a negative 1.8 percent in the same period last year.  This may mean that manufacturers have been stocking up on intermediate inputs in anticipation of a recovery in the global demand for electronic products,” Balisacan said.

Spending for construction of physical capital increased by 24.3 percent in the third quarter of 2012, a huge turnaround from a negative 8.8-percent performance in the third quarter of 2011. Both private and public construction registered more than 20-percent growth rates during the said period.

“We have previously noted that a major driver of this growth is the demand for office space due to the strong outlook of the BPO [business-process outsourcing] sector.  Also, favorable economic conditions led more individuals to purchase residential property.  On the other hand, public spending on construction grew, backed by the higher capital outlay of government, 38.4 percent more, for roads and irrigation projects.  Most of these projects were implemented outside NCR [National Capital Region], in keeping with our objective of inclusive growth,” the Neda director general said.

The government also contributed to the growth, with its final consumption expenditure expanding by 12 percent, as personnel services grew by 11.9 percent due to the implementation of the last tranche of the Salary Standardization Law.

Several programs were also implemented, including the Department of Agriculture’s rice and corn program in support of food security and the Department of Social Welfare and Development’s Conditional Cash-Transfer Program, which now benefits more than 3 million poor families and around P15.3 billion disbursed.

“On the supply side, services continued to account for the lion’s share of the GDP at 58 percent.  This was led by trade, which grew by 7 percent in the third quarter of 2012.  Real estate also posted strong expansion, as major players including Ayala Land, SM Prime Holdings and Megaworld posted double-digit revenues in terms of real estate and rent of commercial spaces,” Balisacan said.