Philippines speeds past Asean neighbors as 3Q economic growth surprises
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MANILA – (UPDATE 6, 4:33 p.m.) The Philippine economy grew 7.1 percent in the third quarter, the National Statistical Coordination Board said on Wednesday.
This led the country’s gross domestic product (GDP) to expand by 6.5 percent in the first nine months, or above the high-end of the government’s full-year target range of 5-6 percent. A measure of economic performance, GDP is the amount of final goods and services produced in the country.
"We are on our way to exceeding our target of 5-6 percent," Socioeconomic Planning Secretary Arsenio Balisacan said, adding that the country's third-quarter expansion is the fastest in Asean and the second-best in Asia next to China.
He said Indonesia trailed the Philippines with growth of 6.2 percent, followed by Malaysia, 5.2 percent; Vietnam, 4.7 percent; Thailand, 3 percent; and Singapore, 0.3 percent. China however remains the fastest-growing in Asia at 7.7 percent.
The third-quarter expansion exceeded analyst expectations of 5.4-5.5 percent, after growth slowed to 6 percent in the April-June quarter from the 6.4 percent in the January-March period.
The Philippine stock market roused from uninspired trading after the GDP numbers were released, with the composite index scaling new highs to close Wednesday at 5,633.72.
"This is a big pleasant surprise. It's very good," Ramon Clarete, economic professor at the Univeristy of the Philippines said, adding that this jibed with the upgrade in the country's growth forecast by the World Bank and the Asian Development Bank.
Clarete said he was pessimitic about the third quarter because of the weak exports brought about by the strong peso. The NSCB however reported that exports grew 6.9 percent in the third quarter, a turnaround from the 11.9 percent contraction last year.
Driving Philippine GDP growth in the July to September period were industry and the services sectors.
The services sector, which comprises half of the economy, expanded 7 percent. Leading expansion was the trade sub-sector, which grew by 7 percent. Real estate also turned in strong results, as major players Ayala Land, SM Prime Holdings and Megaworld posted double-digit increases in revenues.
Industry, which grew by 5.5 percent in the second quarter, increased 8.1 percent. Agriculture, which took a hit from inclement weather in the July-August period, nonetheless grew by 4.1 percent.
On the demand side, consumer spending, which accounts for two-thirds of the country’s GDP, rose 6.2 percent. Government spending accelerated by 12 percent, with construction jumping 24.8 percent.
In his Twitter feed, Finance Secretary Cesar Purisima said the third-quarter performance "shows the economics of good governance or Aquinomics works."
"This is the ultimate public-private sector partnership. Government takes care of fiscal sustainability, macroeconomic stability and continued business facilitation while the private sector takes responds with more investment and consumption," Purisima said.
"This economic performance is significant since one, it is much higher than the trend growth of 4.7 percent the past 10 years; two, it was accomplished in a very difficult economic environment; and three, mining declined by 2.2 percent," he said.
"This means that mining represents an extra gear for the Philippine economy once the regulatory environment is rationalized. The peace agreement represents another extra gear," he added, referring to the peace deal the government signed with the Moro Islamic Liberation Front.
Balisacan, who is also director-general of the National Economic and Development Authority, said the government "expects this momentum will continue," even as the global slowdown remains a "serious threat."
"We will face the fourth quarter not only with utmost optimism but also with careful vigilance, especially noting the challenges ahead. The problems in the Euro area remain unresolved. There is also the looming fiscal cliff in the US," he said.
He also said the midterm elections scheduled for May next year "would not be a very important source of growth," citing the 2010 presidential elections, which contributed only 0.26 percentage points to the domestic economy, lower than the 0.36 percentage points during the 2007 polls.
More inclusive growth a challenge
Balisacan said the Philippines however has to sustain high growth "not just one quarter, but many quarters para ma-feel mo na may nangyayari."
"I think the challenge is to make the growth more inclusive and hindi lang kakaunti ang nakikinabang, but also the ordinary people. That can happen only if you will see rapid increases in employment opportunities," he said.
At end-July, the country's jobless rate stood at 7 percent or 2.82 million unemployed Filipinos. However, underemployment - the proportion of the labor force that is still looking for additional income - rose to 22.7 percent or 8.5 million Filipinos from 19.1 percent last year.
Despite outpacing growth in the rest of Asean, the Philippines' average income per capital remains below that in Indonesia, Thailand and Malaysia, Balisacan said.
"That is why our objective is to make that growth sustainable para makaabot tayo sa kanila," he said, referring to the poor.