Beats forecast at 6.1% but down from 7.2% year-earlier
The Philippines ranked second only to China in the speed of economic growth last year, registering 6.1 percent in gross domestic product (GDP) terms versus China’s 7.4 percent and Vietnam’s 6.0 percent.
The Philippines’ economic planning body pointed out in its release of the official data that the full-year GDP figure exceeded the forecasts made for that year by private analysts, which stood at a maximum of 6 percent.
From the government’s own projection of between 6.5 percent and 7.5 percent, however, last year’s rate of growth stood 0.4 percentage point lower and was far below the actual 7.2 percent expansion achieved in 2013.
GDP growth for full-year 2014 accelerated on the back of a 6.9 percent rebound in the fourth quarter of the year from three preceding consecutive quarters of deceleration, official figures released by the National Economic and Development Authority (NEDA) and the Philippine Statistics Authority (PSA) show.
Although the actual full-year expansion fell short of the 6.5 percent to 7.5 percent target of the government, Socioeconomic Planning Secretary and NEDA Secretary General Arsenio Balisacan focused on the developments in the fourth quarter. He pointed out that growth appears to be broad-based as all three major productive sectors—the agriculture, industry and the services sectors “have shown positive and robust growth during the period.”
NEDA credits business confidence
In a press briefing, the NEDA head highlighted the 4.8 percent year-on-year rate of growth in the agriculture sector in the fourth quarter, which he said was significant in light of the comparative 0.9 percent rise a year earlier, attributing the acceleration mainly to the recovery in crop harvest and fisheries output.
Overall industry output rose 9.2 percent in the last quarter, its highest in the last six consecutive quarters since Q3 2013, on the back of a double-digit expansion in construction, Balisacan said.
The services sector clocked in 6.0 percent for the fourth quarter, the same rate of growth posted by the sector for its 2014 full-year average.
“These numbers show the sustaining and reinforcing dynamism from the private sector that is contributing to growth of the Philippine economy amid the various challenges it faces. Thus, maintaining and increasing this level of business confidence is always an utmost priority for the Philippine government,” Balisacan added.
The NEDA director general stressed that demand was robust during the period, reflected by higher purchases of food and non-alcoholic beverages, durable equipment and materials for private construction.
Private consumption was also buoyed by a 2.8 percent increase in the number of employed Filipinos to 38.8 million from 37.8 million a year earlier, based on the October 2014 round of the Labor Force Survey.
Balisacan said exports surged 15.5 percent in real terms in the fourth quarter, and 12.1 percent for the full year.
In terms of public spending, the government stood by its commitment to ramp it up during the last three months of 2014, he said.
That was evident, he said, in the 9.8-percent increase in the Government Final Consumption Expenditure during the period, a far cry from contractions of 2.6-percent in the third quarter of 2014 and 0.4-percent in the last quarter of 2013.
“The numbers tell us that we are moving in the right direction. There may have been some glitches along the way as we adjusted to the new systems that the government had put in place in pursuit of good governance,” he said.
Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands, said the reported 2014 full-year growth is a welcome development, particularly as agriculture bounced back from its moribund performance in the third quarter.
He noted that national government spending and the construction industry helped boost the overall GDP print, but added:
“However, this is still well below the fiscal year growth target of the government.
This year’s ambitious target will also be a challenge as we forecast GDP in 2015 to reach 6.5 percent, below once again the 7 percent to 8 percent GDP target,” he said.
Justino Calaycay, analyst at Accord Capital Equities Corp., said the 2014 GDP numbers look positive, with growth in the quarter coming from both demand and supply.
“If that can be sustained this year, 2015 indeed looks promising. We expect public consumption to continue to pick up steam going into the election cycle,” Calaycay added.
Taking an opposite view is Benjamin Diokno, economics professor at the University of the Philippines (UP), who said the government failed to do its part to support the economy which is by ramping up spending.
In particular, Diokno explained on an annual basis, the gross value added construction was robust at 8.5 percent. However, he noted that the expansion in construction can be traced to the 12.9 percent growth in private construction as public construction shrunk by 1.5 percent.
On average for the year, the UP economist said government consumption expenditures edged up by only 1.8 percent.
“In sum, the government failed to perk up the economy in the area where it could have done the most,” he said.
“Agricultural growth is low and below historical average hence growth is still not inclusive,” he added.