Exceeding market and government expectations, the economy grew by 7.8 percent in the first quarter of 2013, surpassing the growth posted by China and other countries in the Association of Southeast Asian Nations (Asean).
The figure was also higher than the government’s revised 6.5-percent growth last year and the 7.1 percent recorded in the fourth quarter of 2012.
In a press conference on Thursday, Socioeconomic Planning and National Economic and Development Authority (NEDA) Director General Arsenio Balisacan reported that the country’s gross domestic product (GDP) bested China’s 7.7 percent, Indonesia’s 6 percent, Thailand’s 5.3 percent, and Vietnam’s 4.9 percent.
“Business confidence and consumer optimism fuelled this growth, putting to rest doubts cast on the 2012 figures as being due to base effects only,” Balisacan said.
National Statistical Coordination Board (NSCB) Secretary General Jose Ramon Albert said the first quarter growth is the highest so far under the Aquino administration.
“The robust growth was boosted by the strong performance of manufacturing and construction, backed up by financial intermediation and trade,” Albert said.
The NSCB noted that higher consumer and government spending shored up by increased investments in construction and durable equipment contributed to the highest quarterly GDP growth since the second quarter of 2010.
The growing remittances of overseas Filipino workers accelerated the net primary income from the rest of the world to grow by 3.2 percent, boosting the gross national income (gni) to 7.1 percent from 5.7 percent in 2012.
The NSCB added that with the country’s population reaching 96.8 million in the first quarter of 2013, per capita GDP grew by 6.1 percent, the per capita GNI by 5.3 percent and the per capita Household Final Consumption Expenditure by 3.4 percent.
On the production side, all major sectors contributed to growth during the period, NEDA said. Services expanded by 7.0 percent; industry, by 10.9 percent, and the agriculture sector by 3.3 percent.
“Impressive performance of these sectors proves that the country is already reaping the benefits of strengthening priority sectors that are potential growth drivers and employment generators,” said Balisacan.
Finance Secretary Cesar Purisima attributed the robust first quarter figure to the substantial expansion in government expenditures which grew by 13.2 percent, and public construction at 45.6 percent.
“Coupled with the country’s first investment grade rating by a major ratings agency, truly, we can say with much pride that good governance is good economics,” Purisima said.
He said the manufacturing grew by 9.7 percent and construction by 32.5 percent, proof that investors are putting their faith in the Philippines for the long term, and not merely speculating on the markets.
Budget and Management Florencio Abad said public spending continues to drive the economy, with Government Final Consumption Expenditure growing by 13.2 percent.
“With our GDP expanding by 7.8 percent in the first quarter, the Philippines’ economic performance continues to fly in the face of market expectations, setting as well as a new precedent for the Administration’s fiscal management strategy,” Abad said.
Maintenance and operating expenditures and personnel services spending jumped by 25.1 percent and 12.4 percent, respectively, he said.
“Even as global market uncertainties persist, the country’s public spending performance continues to respond to high local demand,” he added.
Philippine Economic Society President Alvin Ang said in his twitter account that country’s first-quarter GDP figures are encouraging and “pointing to a sustainable rebuilding of physical infrastructure.”
“The key to the Phil GDP growth becoming inclusive is that it must be sustainable,” he said.
Ang added that private sector support to GDP growth must also go into human capital formation and direct poverty alleviation.
NEDA Director General Cayetano Pa-deranga said in a text message the robust growth is what the government has been working for and expecting.
“The hope is that this is sustained as we now get on a higher growth track. The expectation is that things will improve further as complementary private sector investments come in,” Paderanga said.
HSBC economist Trinh Nguyen described the growth as “impressive”.
But she cautioned that government spending had been vital to the growth, and this might not be sustainable amid continued low government revenues.
She also pointed out that despite consistent fast growth in the Philippines—the economy grew by 7.1 percent in the final three months of 2012 and 6.8 percent for the year—the unemployment problem had not improved.
The country’s unemployment rate rose to 7.1 in January, from 6.8 percent at the end of 2012, according to official data.
Economists say one of the worst traits of the Philippine economy is a huge rich-poor divide, with a remarkably few number of families and companies swallowing up most of the benefits of growth.
‘No one is left behind’
Elated by the impressive growth figure, Malacanang said the government hopes to sustain the growth and ensure that all Filipinos will feel its positive effects.
Palace deputy spokesman Abigail Valte however said the government will continue to work for inclusive growth as it is determined to make sure that “no one is left behind”.
“The recent election results show that the public has confidence in the President, and agrees with the direction the country is going,” she said. ”Therefore, our administration will continue to promote and expand policies that lead to a Philippines where no one is left behind.”
“That is always the target. That nobody will be left behind. That with the high number that we have, even with the boost in investor confidence, the rallies that you’ve been seeing in the stock market, ang importante po sa atin ay maramdaman ng lahat. And this is why we are after continually working for job generation,” she added.
The government expects the growth to be sustained, according to Valte.
She said the administration will be expanding “direct intervention” programs to help the poor, noting that the Pantawid Pamilyang Pilipino Program’s (4Ps) budget has increased four-fold.
The 4Ps or the conditional cash transfer (CCT) program for the poor covered 3.9 million Filipino households.
Valte said the Aquino government continues to focus on fostering inclusive growth and hopes to attract more investments especially in agriculture, tourism, and infrastructure that will lead to job creation.
With report from AFP