Economy grew 7.2% despite disasters
MANILA, Philippines—The Philippine economy grew faster than targeted in 2013 as the adverse impact of Super Typhoon Yolanda proved to be more moderate than earlier feared.
But most Filipinos said their quality of life worsened last year despite government efforts to make the robust growth “inclusive.”
The Philippine Statistics Authority, the newly formed agency that consolidates all government statistics, announced Thursday that the economy, measured in terms of gross domestic product (GDP), grew by an annual rate of 7.2 percent in the past year.
This exceeded the government’s official growth goal of between 6 and 7 percent. This also was better than the 6.8 percent recorded for 2012.
GDP is the total value of goods produced and services rendered in the country for a given period.
In the fourth quarter alone, the Philippine economy grew by a subdued pace of 6.5 percent due to the drag caused by the super typhoon.
Yolanda (international name: Haiyan), which left 8,000 dead and missing after ploughing through central Philippines in November last year, was estimated to have caused P571 billion in economic losses. The amount includes damage to public infrastructure and properties, as well as lost potential income due to the disruption of businesses.
Yolanda came after a 7.1-magnitude quake struck some of the country’s main tourist regions in October, claiming more than 220 lives.
In a press conference, Socioeconomic Planning Secretary Arsenio Balisacan said the Philippines’ latest growth performance likely made it the second-fastest-growing economy in Asia next to China, which expanded by 7.7 percent.
“Other countries have yet to release their official economic growth rates for 2013 but based on latest data, we likely remained one of the fastest-growing economies in Asia, probably next to China,” Balisacan said.
The benefits of the robust economic growth apparently did not trickle down to the poor.
A Pulse Asia survey last December found that 55 percent of Filipinos said the national quality of life deteriorated in the past 12 months. They also expected the situation to remain the same for the whole of 2014.
Last year, the poverty rate stood at 25.2 percent. The Philippines likely will miss the Millennium Development Goal of reducing poverty incidence to only 16.6 percent in 2015, according to projections.
At a briefing, Communications Secretary Herminio Coloma acknowledged that one of the biggest challenges for President Aquino is to halve poverty incidence.
Coloma said the Aquino administration was still aiming to reduce poverty by 16 percent, the “halfway mark,” by 2015.
“Most important, the government remains focused on achieving inclusive growth by reducing poverty and increasing social protection. The updated Philippine Development Plan emphasizes the spatial or area-specific dimensions of development,” he said.
Hence, government spending is directed at increasing the productivity and reducing the vulnerability of farmers, fisherfolk and other marginalized sectors of Philippine society.
Coloma cited “specific programs” such as conditional cash transfer (CCT), Philippine Health Insurance universal coverage and K to 12 educational program as parts of the administration’s overarching goal to reduce poverty.
The government is banking on an additional P10 billion for the CCT program this year, already earmarked in the 2014 General Appropriations Act, to lift 4.3 million families out of poverty.
Balisacan said the updated Philippine Development Plan, which may be released in February, would present government projects and programs seeking to help boost jobs, especially among the low-
income segment of the population.
The government intends to invest more in initiatives that will further boost the growth of the manufacturing sector and that will develop tourism, construction and agriculture sectors, Balisacan said. These sectors are seen as more capable than others in providing jobs to poor people.
Remarkable despite storm
Balisacan said that if not for the super typhoon, economic growth in the fourth quarter could have ranged from 7 to 7.3 percent. He also said the calamity chopped off 0.1 percentage point from the economy’s full-year growth in 2013.
“Still, economic growth last year was remarkable despite the impact of Yolanda,” Balisacan said.
Originally, growth in the fourth quarter was expected to slow down to as weak as 4.1 percent due to the adverse impact of the super typhoon. Balisacan, however, said something unexpected partly offset the drag caused by the calamity.
The reference was to the unusual growth of the manufacturing sector, which has started to increase its contribution to the economy’s growth.
“We saw an increase in investments and an expansion of the manufacturing subsector. This could be attributed partly to the growing confidence of investors, as they see the country’s strong macroeconomic fundamentals,” Balisacan said.
The manufacturing subsector grew by 12.3 percent last year, accelerating from only 5.5 percent in 2012.
It drove the growth of the overall industrial sector, which accelerated to 9.5 percent from 6.8 percent.
The improved performance of the manufacturing subsector was accounted for mainly by increased investments by domestic firms.
Balisacan said fundamentals like moderate inflation, the sound fiscal position of the government and the country’s comfortable foreign-exchange reserves encouraged Filipino businesses to invest more in the country.
Services, agri slow
On the contrary, the two other key sectors of the economy—services as well as agriculture, fisheries and forestry (AFF)—posted slower growth rates. Services slowed down to 7.1 percent from 7.6 percent while AFF decelerated to 1.1 percent from 2.8 percent.
The decelerated growth of the AFF sector was blamed on weather disturbances that dragged farm output.
Finance Secretary Cesar Purisima said the robust economic growth last year showed the country’s resiliency to shocks such as calamities.
He noted that 2013 marked the eighth consecutive quarter that the country’s economic growth stood above 6 percent.
“Our strong growth shows the ability of the Philippine economy to weather these challenges due to strong macroeconomic fundamentals,” Purisima said.
The finance chief, however, admitted that the country needed to improve its preparedness for disasters. He said the government had to invest more in disaster-risk management such as better infrastructure and in programs that will promote insurance among the poor.
On the same note, Governor Amando Tetangco Jr. of the Bangko Sentral ng Pilipinas said last year’s growth proved that the economy had a buffer against risks.
“The growth of above 7 percent reinforces our assessment that the fundamental strength of the economy is intact,” Tetangco said.
Target for 2014
For 2014, the country’s chief economist said the government was confident the official growth target of 6.5 to 7.5 percent was attainable.
Balisacan said a favorable business sentiment was likely to sustain rising investments. He also said the government was bent on increasing spending on infrastructure and social services to help achieve economic growth.
In a commentary published on Thursday following the release of the economic growth figure, however, Metropolitan Bank and Trust Co. said sustaining the strong growth in investments and manufacturing would be a challenge this year amid rising inflationary pressures.
The bank projects economic growth for this year to settle at 6 percent.
Senate President Pro Tempore Ralph Recto challenged the Aquino administration to take more steps to ensure that economic growth was felt by most Filipinos.
“A rising tide must rise all ships. Sadly, big vessels are not as buoyant as small ones. And millions of our people with their heads barely out of the water cling to thrown lifelines,” Recto said in a statement.
Sen. Paolo Benigno Aquino IV, chair of the Senate committee on trade and entrepreneurship, said the growth rate was “phenomenal.”
“Our economic managers indeed deserve to be congratulated. That being said, though, the challenge of translating this economic growth to sustained benefits for our poorest countrymen still continues,” Aquino said.—With reports from Norman Bordadora and AFP
Originally posted: 11:27 am | Thursday, January 30th, 2014
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