MALACAÑANG on Thursday welcomed the 6.8 percent rate of economic growth in the country in 2016, the fastest full-year pace in three years.
Economic growth as measured by gross domestic product (GDP), the value of goods and services produced by the domestic economy, last year on the back of increased activity in manufacturing, trade and real estate.
In the fourth quarter of 2016, GDP grew by 6.6 percent, moderating from 7 percent in the third quarter but faster than the 6.3-percent growth recorded in the final quarter of 2015. This was enough to boost the full-year pace to its fastest since 2013, the Philippine Statistics Authority (PSA) reported on Thursday.
“The last quarter of an election year is usually weak with the government transition. However, in our case, it has actually improved,” presidential spokesman Ernesto Abella told reporters.
“The 6.6-percent growth in fourth quarter is a testament that our economy remains robust and is growing at a healthy and steady rate. Also, the Philippine economy is likely the third or fourth fastest-growing economy in the fourth quarter of 2016 after China and Vietnam,” he added.
Growth in 2016 topped the 5.9 percent pace registered in 2015 and 6.2 percent in 2014. The economy grew by 7.1 percent in 2013.
“Among the major economic sectors, industry had the fastest growth at 7.6 percent, higher than the previous year’s 6.5 percent growth,” National Statistician Lisa Grace Bersales said in a news conference on the 2016 national income accounts.
“Services decelerated by 7.4 percent from 7.8 percent growth in the fourth quarter of 2015. On the other hand, Agriculture declined further by 1.1 percent. In the same period of the previous year, it dropped by 0.2 percent,” Bersales said.
Full-year growth settled within the 6.7 percent to 7 percent forecast range by private analysts polled by The Manila Times, and within the government’s 6 percent to 7 percent target.
At 6.8 percent, the Philippines could become the second fastest-growing economy in Asia for 2016. China grew at 6.7 percent and Vietnam at 6.2 percent last year, according to the National Economic and Development Authority (NEDA).
Outlook
Socioeconomic Planning Secretary Ernesto Pernia sees the industry sector staying vibrant, with the construction industry expected to be in the limelight following the government’s commitment to implement critical infrastructure projects.
The services sector is expected to remain strong, supported by moderate inflation, tourism and retail trade, as well as a healthy financial system, sustained growth of remittances and the continued expansion of the information technology-business process management sector.
“Domestic demand has so far remained buoyant, and should continue to provide support to economic growth in the near to medium-term. Improved employment prospects and favorable income conditions will underpin the growth in household consumption,” said Pernia, the NEDA director general.
Given the 2016 GDP result, the government target of 6.5 percent to 7.5 percent growth for 2017 is “highly likely” to be achieved, the Cabinet official said.
In the medium term, growth will strengthen further to between 7 percent and 8 percent, he said, forecasting the economy to expand by about 50 percent in real terms and per capita income by over 40 percent over the next six years.
“This should bring us to the upper middle income category standing by 2022. More importantly, we hope to reduce the poverty incidence to 14 percent by 2022, thereby lifting about 6 million Filipinos out of poverty,” Pernia said.
Risks
But the way toward the goal is not without risks, Pernia warned, citing the impact of bad weather, policy shifts in the United States and the geopolitical situation. “For now, our biggest roadblock is an extreme weather disturbance like that of the El Niño,” he said.
He called for the development of the agriculture sector to make it resilient to shocks.
“We are deeply concerned about the contraction of the crops sector in the fourth quarter following a contraction the previous year. More disturbing is the performance of the fishery subsector that remained in negative territory for almost seven years now, except only in 2013,” he said.
Pernia said nurturing entrepreneurship and attracting investments that produce higher-paying quality jobs, especially outside of Metro Manila, were among the government’s significant goals.
Such requires a secure and stable economic and political environment, he said.
“Moreover, we need to ensure that our sectors are resilient and diversified in both of products and markets. In particular, we need to champion innovation and diversification in the industry sector as it is still heavily dependent on external demand,” he said.
In the services sector, Pernia cited the need for a policy environment that makes it easier for firms to set up and operate businesses and heed regulations.
CATHERINE S. VALENTE