by Chino S. Leyco
The Philippine economy became the fastest in Asia despite slower expansion pace in the final three months of the year, the National Economic and Development Authority (NEDA) said yesterday.
The country’s gross domestic product (GDP) grew by 6.6 percent in October to December, slower compared with 7.0 percent in the previous quarter, and 6.9 percent in the first-semester in 2016, data from the Philippine Statistics Authority showed.
The fourth-quarter GDP brought the country’s full-year economic growth to 6.8 percent, the fastest since 2013, and placing at the higher-end of the government’s 6.0 percent to 7.0 percent target range.
The full-year expansion of China is 6.7 percent, while Vietnam’s is 6.2 percent.
According to Socioeconomic Planning Secretary Ernesto M. Pernia, the growth was driven by higher investment and consumer spending, while the slowdown was due to the transition of government.
Pernia also said investors adopted a “wait-and-see” attitude during the October to December period, noting “last quarter growth of an election year is usually slower than the first half.”
Still, Pernia said the country’s expansion last year was a testament that the economy remained robust and is growing at a healthy and steady pace.
The 2016 growth also brought the country’s seven-year moving average of real GDP growth rate to 6.3 percent, the highest since 1978.
Presidential spokesman Ernesto Abella welcomed the country’s strong GDP growth and voiced confidence this could be sustained “in the long run.”
“The last quarter of an election year is usually weak with the government transition. However, in our case, it has actually improved,” Abella said in a Palace news conference.
The latest economic figure is “a testament that our economy remains robust and is growing at a healthy and steady rate,” Abella added.
“Overall, we believe that the target of 6.5, 7.5 for 2017 is highly likely and that our strong economic performance is likely to be sustainable in the long run,” he said.
For this year and beyond, Pernia is confident that the economy will continue to grow at a robust pace, noting “the 6.5 to 7.5 percent target [for this year] is highly likely. After 2017, we expect growth to expand further by 7 to 8 percent.”
He identified risks to the country’s growth, including typhoons and extreme weather events like policy shifts overseas, especially in the United States.
Under the Duterte administration plan, the government seeks to grow the economy by 50 percent in real terms during its six years in office to lift six million people from poverty and bring the Philippines to upper middle income status.
MAIN ECONOMIC DRIVERS
National Statistician Lisa Grace S. Bersales said that manufacturing, trade, and real estate, renting and business activities were the main drivers of growth for the fourth quarter.
The industry sector was the fastest at 7.6 percent, up from the 6.5 percent in the fourth quart of 2015, but services decelerated to 7.4 percent from 7.8 percent.
On the other hand, agriculture maintained a negative trajectory, falling by 1.1 percent from a 0.2 percent drop.
Meanwhile, Pernia said the government saw a significant jump in visa application at the Philippine embassy in China, noting the number of applicants tripled following President Duterte’s friendlier policy with Beijing.
“Chinese tourists are going to be coming in droves,” Pernia said.
Pernia said tourism would also get a boost from the country’s hosting of the 65th Miss Universe pageant and the Association of Southeast Asian Nations meetings.
The Department of Tourism recorded 5.4 million international arrivals from January to November last year, up by 12 percent from the comparable period in 2015. Visitor receipts grew 3.24 percent to P211 billion.
PESO HAS ‘MUTED’ REACTION
Meanwhile, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. noted the subdued opening trade of the peso-US dollar market following the government’s announcement of the 6.8 percent full-year GDP growth.
The peso opened quietly enough at P49.65:$1 versus Wednesday’s closing of P49.81.
Tetangco said the GDP numbers were in line with market expectations. But he said “market reaction in the spot foreign exchange has so far been muted.”
He also noted that domestic demand remains “robust” and the government’s “thrust on infrastructure spending should provide a solid base for the economy to meet the 2017 growth target” of 6.5 percent to 7.5 percent.
“The inflation outlook also remains manageable (so) there is no real pressing need to deviate from current stance of monetary policy,” added Tetangco. “That said, we continue to monitor external developments that may affect our growth dynamics and financial markets. We will adjust policy levers as and when necessary.” (With reports from Lee C. Chipongian and Genalyn D. Kabiling)
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