RP ECONOMY GREW 6.4% BEYOND EXPECTATION IN 1st QUARTER
[PHOTO -Public construction fueled hiked growth in the first quarter, which registered an unexpected 6.4 percent growth.INQUIRER/ MARIANNE BERMUDEZ]
MANILA, JUNE 1, 2012 (INQUIRER) By: Riza T. Olchondra The Philippine economy grew 6.4 percent in terms of gross domestic product in the first quarter of 2012, driven mainly by a robust services sector and higher domestic consumption, government officials said at a press briefing on Thursday.
National Statistical Coordination Board secretary-general Romulo A. Virola said that services contributed the most to GDP growth with 4.7 percentage points (the highest since the third quarter of 2004), followed by industry with 1.6 percentage points and agriculture, fisheries, and forestry with 0.1 percentage point.
Socioeconomic Planning Secretary Arsenio M. Balisacan said the first-quarter growth was well above the market’s consensus forecast of 4.8 percent.
“Also, the Philippines posted the highest growth among Asean and other neighboring countries except China,” said Balisacan, who is also the director-general of the National Economic and Development Authority (NEDA).
[PHOTO -WILL THEIR LIVES CHANGE? The government is confident that as the economy continues to grow, the benefits will improve the lives of marginalized people like these Dumagat children in Rizal. ( Jacqueline Hernandez)]
Growth for the quarter was supported by accelerated government spending (including for infrastructure and conditional cash-transfer spending), low prices which supported household consumption, better-than-anticipated exports performance, continued credit expansion, overseas remittances, tourism, and business and consumer confidence, Balisacan said.
According to NEDA, growth in the first quarter of 2012 translated to an increase in employment of 1.101 million, mainly in services and industry. Tourist arrivals reached 1.15 million in the same period. Overseas Filipino remittances increased by 5.4 percent to reach $4.84 billion in the first three months of 2012.
Balisacan said growth in the January-March period may be sustained in the second quarter and may even accelerate for the rest of the year.
As the first-quarter growth numbers exceeded most expectations, there comes the inevitable question of whether the growth is sustainable or at least translates to job creation and poverty reduction.
“The continued strong inflows of remittances, robust inbound tourist receipts and low inflation environment contributed to significant increases in employment creation, particularly in the services sector, which fueled consumption,” Balisacan said.
However, Dr. Benjamin E. Diokno of the UP School of Economics said via e-mail that the better-than-expected economic growth may not necessarily be sustainable.
“Is the better-than-expected economic growth the result of playing around with price deflators? For example, agriculture shrank by 3.1 percent in nominal terms; yet it increased by 1 percent in real terms. That’s silly unless food prices fell during the period, which they didn’t,” he said.
Diokno also pointed out that exports growth exceeding imports growth, as shown in government figures, is “unusual” considering the small growth of exports. He said this may indicate that imports, especially electronic products that make up the bulk of shipments, must really be low given the recent growth in petroleum imports.
“Certainly, the positive net export is not sustainable and perhaps not even consistent with strong growth in the future. The global market is shrinking and volatile. The growth of the Philippine economy should be based on domestic demand,” Diokno said.
Diokno also noted that there was a “worrisome” trend in construction which, he said, grew on base effect.
“Public construction in the first quarter of 2011 was horrendous. The worrisome trend is the behavior of private construction, which started to stall in the second half of 2011. Private construction plummeted 9.9 percent in the first quarter of 2012 from a strong expansion of 23 percent in the first quarter of 2011. Private construction accounts for about 3/4 of total construction. This suggests that the government has to step up its public-private partnership projects and the implementation of its infrastructure program,” he said.
GDP growth in the first quarter of 2011 was 4.9 percent. Growth for full-year 2011 was 3.9 percent.
For full-year 2012, the “fighting target” for GDP growth is still 5 to 6 percent although there is a possibility that actual growth may exceed this level, said Balisacan.
Higher growth would help the Philippines meet its target average annual growth of 7 to 8 percent from 2010 to 2016.
Chief News Editor: Sol Jose Vanzi
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