Palace: Good governance means good economics
Economic team ... President Aquino (right) predicts an impressive
Philippine economic growth of more than 6 percent in a speech during the 40th
anniversary of Neda on Tuesday. He is shown with (from left) former Neda
Director General Cayetano Paderanga, Neda Deputy Director General Rolando
Tungpalan and current Neda chief Arsenio Balisacan. Lyn Rillon. – Inquirerpic
By RIZA T OLCHONDRA, TJ BURGONIO
LIVING up to President Aquino’s advance information that the numbers
would impress, the Philippine economy expanded 6.8 percent in the fourth
quarter of 2012, lifting full-year growth to 6.6 percent.
The figures that government economists and statisticians announced
Thursday beat their targets and analysts’ expectations.
Socioeconomic Planning Secretary Arsenio M. Balisacan said that on
hindsight, the government’s 5- to 6-percent growth target for the past year
seemed conservative.
Median forecasts from the World Bank and other institutions were 5.9
percent for the fourth quarter and 6.4 percent for the full year.
Compared with the latest available data from other Asean countries, the
Philippines’ fourth quarter growth in gross domestic product (GDP), the value
of goods produced and services rendered in a given period, was higher than
Vietnam’s 5.4 percent and Singapore’s 1.1 percent.
China’s economy expanded by 7.8 percent in the last quarter. Other
countries still do not have available data for the full year.
Unsurprisingly, the GDP announcement by the National Economic and
Development Authority (Neda) and the National Statistical Coordination Board
(NSCB) was trending on Twitter, earning kudos from industry groups, such as the
Makati Business Club.
Private economists, however, were not as impressed, noting that the
lingering question was whether such figures could be sustained and translated
into better incomes for many Filipinos.
Expectedly, Malacañang cheered the “exceptional” growth rate,
trumpeting it as proof of the country’s ability to move toward “equitable
progress” on a policy of good governance.
“It is a resounding affirmation of the Aquino administration’s fiscal
strategy, backed as it is by our robust macroeconomic fundamentals and more
importantly, the principles of good governance,” Budget Secretary Florencio
Abad said in a statement.
Presidential spokesperson Edwin Lacierda attributed the economic growth
to private sector activity goaded by the administration’s policy reforms.
While it was initially driven by government stimulus, the economic
growth was now increasingly being driven by private sector activity, including
investments, which grew by 8.7 percent in 2012, Lacierda said in a briefing.
“This means growth is becoming more sustainable from a fiscal and
macroeconomic perspective. Private sector activity has been enabled by the
Aquino administration’s dedication to positive reform. Without doubt, good
governance means good economics,” he said.
Not quite impressed
Benjamin E. Diokno of the University of the Philippines School of
Economics, however, was not impressed.
Diokno said that under President
Corazon Aquino, the economy grew by 6.8% in 1988 after a weak growth in
1987, while under President Gloria Macapagal-Arroyo, the economy
grew 6.7% in 2004 after a weak
growth in 2003, and again by 7.6% in 2010, after a near recession in
2009.
“I agree it’s a strong growth. Considering its long-term growth
potential and growth higher than 6 percent might be considered strong. Is it
sustainable? That remains to be seen. We’ve seen this kind of growth before and
they were not sustained. Is it inclusive? I’m afraid not,” he said.
Diokno said the contribution of agriculture to GDP continued to shrink,
posting the lowest growth among the three major sectors.
“Based on the October labor statistics, the recent growth may be characterized as labor-shredding growth.
Close to 1 million jobs were lost,” Diokno said.
Most Filipinos still depend on
agriculture and related sectors for a living.
NSCB Secretary General Jose Ramon G. Albert said industry and services
led economic growth on the supply side (sources of goods and services).
On the demand side (where goods and services are used), growth was
still largely driven by household consumption and external trade.
Industry grew 6.5% , more than twice the 2.3-percent growth in
2011.
The Neda said the expansion in public and private construction, and the
electricity, gas and water sector led the growth.
In the first two quarters of last year, it was public construction that
took up the slack in construction, but the private sector took over beginning
the third quarter.
“This is what we mean by the private sector upping its stakes in the
economy,” said Balisacan, who is also the Neda director general.
“Equally remarkable was the growth in the electricity, gas and water
sector, growing by 5.1% , a far cry from its growth of 0.6% in
2011. No doubt this was in support of the increased economic activity in 2012,”
he said.
The service sector also beat expectations with a 7.4-percent growth
from trade, transport and communications, real estate, renting and business
activities and other services.
Trade grew by 7.5% in 2012, more than twice the figure in 2011.
Growth in transport and communications accelerated at 9.1% compared with
4.3% the previous year.
“We had expected a slower growth for the real estate, renting and
business activities, which includes the IT-BPO, owing to the continued slowdown
in the global economy. And yet the sector still managed to grow faster than
expected at close to 8 percent,” Balisacan said.
There were also notable gains in other services, particularly,
tourism-related subsectors, such as hotels and restaurants, and recreational,
cultural and sporting activities.
These subsectors grew 13.3% , compared
with only 7.1% in 2011.
Balisacan said he was also pleasantly surprised with the growth in
agriculture (2.7% ).
“We only expected a 2.2%-growth from the sector owing to weather
disturbances forecast for the year,” he said.
In the first two quarters of 2012, it looked like the sector would
underperform with a contraction in the fisheries sector.
However, the
turnaround happened beginning the third quarter and especially in the fourth
quarter when the sector grew by 4.7% .
“We are also pleased to note that the output in the fishery sector had
gone up by 3.3% , from eight consecutive quarters of contraction if not
stagnant growth,” Balisacan said.
Household consumption
On the demand side, household consumption remained the largest
contributor to growth in 2012, growing by 6.1%.
Although the growth was
slower than the 6.3% in 2011.
Balisacan noted that the growth had been on the increase coming from
5.1% in the first quarter up to 6.9% in the fourth.
Growth was supported by the higher level of economic activity, low and
stable inflation, inflows of overseas Filipinos’ remittances and government
subsidy mainly through the conditional cash transfers.
“Note, however, that remittances of overseas Filipinos increased by 8
percent in dollar terms, but only by 2.8% in peso terms in October and
November 2012,” Balisacan said.
Exports of goods recovered with a growth of 8.7% for the year
from a contraction of 4.2% in 2011. Exports of services grew by 9.8
percent, more than twice the growth the previous year.
“However, this growth was actually slower than expected. Perhaps the
sector is already feeling the pinch from the combined impact of the global
economic slowdown and the appreciating peso,” Balisacan said.
Fixed capital formation also improved to 8.7% in 2012 as growth
in investments for public and private construction and durable equipment
registered significant increases.
In spite of the country’s achievements in 2012, Balisacan said the
government would not be “lulled” into complacency.
“It is our immediate task to put in place policies and implement
programs that will sustain our economy’s growth over the medium term. We shall
continue planting the seeds of a structural transformation in our economy to
make it more investment and industry-led. This, in turn, will mean more jobs
and employment opportunities of high quality for Filipinos, thus ensuring that
growth is inclusive and benefits all sectors of society,” he said.
Raise productivity
Cid L Terosa of the University of Asia and the Pacific said the growth
level of at least 6% could be maintained as long as the Philippines kept
building up productivity.
So far, Terosa said, the fourth quarter and full year 2012 growth rates
were impressive but the question remained whether those numbers could translate
into better income for many.
“Employment and continuous structural changes are keys to economic
growth over the medium-term,” he said. - Inquirer
