PH economy expands 6.7% in 2017

The Philippines remained among the fastest growing among emerging economies in the region although slightly slowing in 2017 due to the lack of boost from election-related spending unlike in 2016.

The government reported on Tuesday that the gross domestic product (GDP) grew 6.6 percent in the fourth quarter of 2017, a similar pace from a year ago but slower than the better-than-expected 7-percent expansion in the third quarter.

As such, economic growth averaged 6.7 percent in 2017, slower than the 6.9 percent posted in 2016.

It was nonetheless within the government’s 6.5-7.5 percent target for 2017.

Socioeconomic Planning Secretary Ernesto M. Pernia noted that the GDP growth rates in 2005 and 2011 — both post-election years — dived deeper to 4.8 percent from 2004’s 6.7 percent and to 3.7 percent from 2010’s 7.6 percent, respectively.

“You can see that our decline is really very moderate at 0.2 percent of 1 percentage point. To me, this is a good performance, given the fact that it is already normal for post-election years to witness a decline in economic growth,” asserted Pernia, who heads the state planning agency National Economic and Development Authority (NEDA).

Also, Pernia said the 2017 GDP growth figure was “a strong finish that keeps our position as one of the fastest-growing economies in Asia after China’s 6.9 and Vietnam’s 6.8 percent.”

National Statistician Lisa Grace S. Bersales said manufacturing, trade, as well as real estate, renting, and business activities were the growth drivers in the fourth quarter.

From October to December, the industry sector grew 7.3 percent year-on-year; services, 6.8 percent; and agriculture, 2.4 percent, reversing the 1.3-percent decline in the same three-month period of 2016, Bersales said.

Services contributed 3.9 percentage points to total GDP growth; industry, 2.5 percentage points; and agriculture, 0.3 percentage point, Bersales added.

During the fourth quarter, robust government spending on public goods and services as well as double-digit growth in external merchandise trade sustained economic expansion—the 10th straight quarter that GDP growth was above 6 percent.

“Growth in the fourth quarter was backed by robust growth of 14.3 percent in public spending—that was really the main driver, public spending—which was an increase from 4.5 percent in the previous year,” Pernia said.

“This is very much in line with the government’s commitment to timely delivery of public services and social protection programs, including assistance to victims of typhoons as well as in the Marawi conflict, public scholarship programs, and health expenditure programs,” he added.

Pernia further said: “Also on the expenditure side, external demand improved with growth in exports of goods bouncing back to 20.2 percent in the fourth quarter from 17.2 percent in the third quarter. This offset the services exports sector’s slowdown of 12.6 percent from 19.9 percent in the previous quarter.”

According to the NEDA chief, the “(d)omestic demand growth also strengthened to 7.3 percent in the fourth quarter from 6.4 percent in the third quarter. Fixed investments growth remained positive and accelerated to 9.3 percent with growth in durable equipment improving further to more than 12.1 percent.

“This is indicative of businesses’ continued confidence in the long-term prospects of the Philippine economy,” Pernia said.

Moreover, Pernia noted that expenditures on public construction jumped by a fourth during the October to December period, “which is a boost in line with our ‘Build, Build, Build’ program.”

“We move forward in 2018 with even stronger determination to accelerate growth to hit our target range of 7-8 percent… For 2016 and 2017, economic growth has been strong and steady. Our hope for 2018 and in the medium-term is to shift the trajectory upwards some more,” he said.

According to Pernia, the ambitious “Build, Build, Build” infrastructure initiative, expected pick up in domestic demand and household consumption due to the lower personal income tax rates under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, and moves to lift foreign investment restrictions as well as the rice import quota will sustain robust economic growth moving forward.

In a statement, Finance Secretary Carlos G. Dominguez III said he “expects the economy to expand faster this year now that the Duterte administration’s programs to modernize public infrastructure and sustain the growth momentum have started falling into place,” citing gains from the TRAIN Law as well as a wide array of financing sources for the planned infrastructure buildup.

“These developments, which attest to President Duterte’s unwavering political resolve to effect real positive change and the corollary strong investor confidence in the domestic economy on his watch, would guarantee enough fiscal space to let Government continue pursuing an expansion policy leading to nonstop high—and inclusive—growth,” Dominguez said.

“As I said last year, there will be a more exciting growth narrative for the Philippines this 2018, more so now that all of the government’s plans to keep the country among the world’s fastest-growing economies have started falling into place,” Dominguez added.

For his part, Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla Jr. said “the strong GDP results in the fourth quarter, and in 2017 overall, confirm the underlying strength of the economy that rests on increasingly balanced foundation.”

“This gives the BSP ample policy space to stay focused on meeting its inflation target and pursuing ambitious financial sector reforms,” Espenilla said.                  /kga