Manila: Philippine economy grew by 6.4 per cent from April to June this year due to robust growth in agriculture, consumption, exports, industry, manufacturing, and services which tamed a marked slowdown in government expenditure and consumption, a senior official said.
“We remain one of the bright spots in the region, the second fastest growing economy among major Asian countries for the period. We tied with Malaysia’s performance and topping other major countries of Asean (Association of Southeast Asian Nations) such as Indonesia, which has 5.1 per cent gross domestic product (GDP), and Thailand with 0.3 per cent GDP,” said Secretary Arsenio Balisacan, head of the National Economic Development Authority (Neda).
“The economy is back on the higher trajectory of growth registered in 2012 and 2013 and bodes well for economic growth for the rest of 2014,” said Balisacan, who predicted that “the country still has a strong likelihood of achieving the full-year growth target of 6.5 per cent to 7.5 per cent GDP by end of 2014”.
Identifying areas of robust economic growth in the second quarter, Balisacan said that a big turnaround in major crop harvests boosted agriculture’s growth by 3.6 per cent, from 0.2 per cent in the second quarter of 2013.
People’s consumption grew by 3.6 per cent in the same period, said Balisacan, adding that money spent by relatives of overseas Filipino workers contributed to GDP’s growth.
Net exports contributed 4.2 per cent due to “positive global economy and favourable business sentiment,” said Balisacan, adding that industry grew very high, by 7.8 per cent, including manufacturing, a top scorer, by 10.8 per cent.
Top economic activity
“Manufacturing was buoyed by strong external demand and household final consumption,” explained Balisacan.
Services sector expanded by 6 per cent, due to movements in communications, business, real estate, storage, trade, and transport. “One of the top economic activities was business process management,” said Balisacan.
Although private construction increased by 12.7 per cent in this period, compared to the second quarter of 2013, there was a big contraction in public infrastructure development and other capital outlays, when government agencies posted lower than programmed disbursements from April to May 2014, said Balisacan,
Citing the reason for this under-performance, Balisacan said that government agencies were delayed in submitting new requirements in the release of government funds from general appropriations as approved by Congress.
Solutions to this problem would include “grassroots participatory budgeting,” said Balisacan, adding that requirements for proposed construction activities needed in the rehabilitation of areas damaged by Typhoon Haiyan in central Philippines last November 2013, are “being revised for fast-tracked approval and implementation”..
Haiyan’s damage was pegged at $3 billion (Dh11 billion) and rehabilitation cost of affected areas at $10 billion.
There was also a marked slowdown in government services, said Balisacan, referring to the slowdown in Disbursements in Personal Services and Maintenance and Other Operating Expenditures.
Although the health department spent money to send personnel who extended health care to areas devastated by Typhoon Haiyan in central Philippines, it did not spend money for relief goods because of the large supply that came from donor countries, said Balisacan.
Bottlenecks
Looking forward to rectify negative growth sectors, Balisacan said: “The government is taking the right steps to address bottlenecks in the implementation of critical programmes and projects, particularly key infrastructure projects.
“The identified administrative bottlenecks that contributed to the under performance of the government sector are being addressed,” he said, adding that all these things are being done “because we are aware that market players are still looking for more positive signals, in the public sector’s key role in infrastructure spending and consumption.”
The Monetary Board has also raised policy rates to temper inflationary pressures, but has “allowed ample room for a favourable policy manoeuvre that does not necessarily harm growth prospects [in the Philippines],” said Balisacan.
For a long time, the Philippines has been described as Asean’s sick-man.
Asean is composed of Brunei, Cambodia, Indonesia, Laos, Myanmar, Malaysia, Philippines, Singapore, Thailand, and Vietnam. They will unite as one economy in 2015.
