A vendor arranges eggs for sale at a wet market in Manila on Thursday, Aug. 28, 2014. The Philippine economy bounced back to post 6.4 percent growth in April to June, the second-highest in Asia despite “underspending” by the government, authorities said. AFP PHOTO/NOEL CELIS
MANILA, Philippines–Economic growth was faster than expected in the second quarter, driven by the strong manufacturing sector, putting the country back on track to meeting state targets.
The Philippine Statistics Authority (PSA) on Thursday reported that the country’s gross domestic product (GDP), which measures all the money made in the economy, expanded by 6.4 percent.
Average forecasts by analysts put expected growth at 6.16 percent, a poll by the Inquirer this week showed. In January to March, the economy grew by a revised 5.6 percent.
“Coming from a high base, growth shows the economy is back to its higher trajectory,” Socioeconomic Planning Secretary Arsenio Balisacan said at a press conference. “This bodes well for economic growth.”
In the second quarter of last year, the Philippine economy rose by 7.9 percent, the fastest in Asia at the time. The Philippines regained its spot as Southeast Asia’s best-performing economy, sharing the distinction with Malaysia.
China was Asia’s fastest with a 7.5-percent expansion in the second quarter.
This year, the government’s growth target is 6.5 to 7.5 percent, a goal officials are confident can still be met. The International Monetary Fund and the World Bank expect the country to grow below target.
With first-semester growth at 6 percent, the country would have to expand by 6.9 percent in the second half for state targets to be met, the PSA said.
The Philippine economy grew 6.8 percent in 2012 and 7.2 percent in 2013.
Growth was driven mainly by the manufacturing sector, which rose 7.8 percent. Agriculture grew 3.6 percent, while services expanded 6 percent.
Favorable sentiment
Balisacan said growth in the three major industries reflected favorable consumer sentiment and stronger demand for the country’s exports due to improving global economic conditions.
Of the GDP growth, 2.5 percentage points came from the industry sector, 3.5 percentage points from services and 0.3 percentage point from agriculture.
On the demand side, household consumption grew 5.3 percent, exports were up 10.3 percent, while imports rose 1.4 percent.
Biggest disappointment
Household consumption was driven by steady growth in remittances from overseas Filipino workers.
The biggest disappointment was public investment, which contributed nothing to growth. Government spending contracted in April and May due to administrative bottlenecks that were not addressed until June.
“Public construction fell as the fiscal disbursements were negatively affected by the allegations of corruption regarding President Aquino’s (stimulus) program,” ANZ bank said in a note to clients after that data was released.
“We will keep a close eye on fiscal spending and its effect on the Aquino administration’s roll out of the infrastructure development program,” the bank said.
Balisacan said the government was confident that the growth in spending in June would be sustained in the second half as the state’s reconstruction plan for the Visayas hits full swing.
“We are confident the government will catch up with its program for the year,” he said. Large areas of the Visayas was devastated by Super Typhoon “Yolanda” (international name: Haiyan) last November.
The government’s infrastructure program is expected to play a big role in driving growth for this year. Spending on infrastructure is expected to reach the equivalent of 3.1 percent of GDP this year, up from 1.8 percent in 2010.
The central bank said the economy’s performance showed the country was strong enough to absorb interest rate hikes, which were done to keep prices stable.
Originally posted at 3:47 pm | Thursday, August 28, 2014
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