[PHOTO -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]

MANILA, FEBRUARY 1, 2013 (INQUIRER) By Riza T. Olchondra - The Philippine economy expanded 6.8 percent in the fourth quarter of 2012, pushing full-year growth to 6.6 percent, according to the National Economic and Development Authority and the National Statistical Coordination Board.

Granting that the gross domestic product results in 2012 came from a low base (4 percent growth in fourth quarter 2011 and full-year growth of 3.9 percent), the announced figures still beat government targets and analysts’ expectations. Median forecasts from the World Bank and other institutions were 5.9 percent for fourth quarter and 6.4 percent for the whole of 2012.

Compared with the latest available data from other ASEAN countries, the Philippines’ fourth-quarter 2012 GDP growth of 6.8 percent is higher than that of Vietnam (5.4 percent) and Singapore (1.1 percent). China expanded by 7.8 percent in the fourth quarter of 2012.

Data for other countries were still not available.

Thursday’s GDP announcement trended on social media such as Twitter and earned kudos from industry groups such as the Makati Business Club. Private economists, however, were not as impressed, noting that the lingering question of whether such figures can be sustained and translated to better incomes for many Filipinos.

Socioeconomic Planning Secretary Arsenio M. Balisacan (who is also Neda director-general) said that on hindsight, the government’s 5 to 6 percent target growth for 2012 seemed conservative. However, at the time it was made, it seemed like a “fighting target” in light of the 3.9 percent growth in 2011, and because budgetary reforms had just been put in place or were still to be implemented, the situation in the euro zone was still worsening, the forecast of a mild El Niño weather phenomenon, and many other such uncertainties.

Moving forward, Balisacan said, there needs to be a “massive” private sector investment while the government must develop more infrastructure (especially related to transport and power) and manage peso appreciation. Trade Secretary Gregory L. Domingo, for his part, said increased interest among foreign investors bodes well for industries starting this year.

Cid L. Terosa of the University of Asia and the Pacific said the growth level of at least 6 percent can be maintained as long as the Philippines keeps building up productivity. So far, Terosa said, the fourth quarter and full year 2012 growth rates were impressive but the question remains whether those numbers translate into better incomes for many. “Employment and continuous structural changes are keys to economic growth over the medium-term,” Terosa said.

Benjamin E. Diokno of the U.P. School of Economics was not impressed. Diokno said that under President Cory Aquino, the economy grew by 6.8 percent in 1988 after a weak growth in 1987; under President Arroyo, the economy grew 6.7 percent in 2004 after a weak growth in 2003, and again by 7.6 percent in 2010, after a near-recession in 2009.

“I agree it’s a strong growth. Considering it’s 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 it was not sustained. Is it inclusive? I’m afraid not. The contribution of agriculture to GDP continued to shrink, and it has 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 one 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 of the economy (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 percent, more than twice the growth exhibited in 2011 at 2.3 percent. According to NEDA, the expansion in public and private construction activities and the electricity, gas and water sector led the growth. In the first two quarters of 2012, 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,” Balisacan said. “Equally remarkable was the growth in the electricity, gas and water sector, growing by 5.1 percent, a far cry from its growth of 0.6 percent in 2011. No doubt this was in support of the increased economic activity in 2012.”

The service sector also beat expectations with 7.4 percent growth from trade, transport and communication, real estate, renting and business activities, and other services.

Trade grew by 7.5 percent in 2012, more than twice the growth in 2011. Growth in transport and communication accelerated at 9.1 percent compared to 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 by 13.3 percent, compared to only 7.1 percent in 2011, he said.

Balisacan said he was also pleasantly surprised with growth in agriculture (2.7 percent). “We only expected a 2.2 percent growth from the sector owing to weather disturbances forecast for the year,” Balisacan said.

Chief News Editor: Sol Jose Vanzi

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