7.2% growth in 2013
Philippine Economy 2nd To China’s 7.7 GDP
Manila, Philippines – The Philippine economy posted a 7.2 percent growth in 2013, one of the best performing economies in Asia, second only to China which grew by 7.7 percent, Socio-economic Planning Secretary Arsenio Balisacan said yesterday.
“This is a remarkable turnout as the economy grew better than our expected target of 6 to 7 percent in 2013 despite the challenges we faced during the year, particularly the disasters that struck Central and Southern Philippines in the fourth quarter,” Balisacan said.
“The growth could have been better had we not been perturbed by various disasters that hit the country such as the Bohol earthquake, the Zamboanga siege, and super-typhoon Yolanda,” said Balisacan.
Despite the typhoon that hit the Visayas in November last year, the economy grew by 6.5 percent in the fourth quarter of 2013, he added.
The services and industry sectors continued to be the drivers of economic growth in 2013. The services sector contributed 3.6 points of the real GDP growth in the fourth quarter of 2013, followed by the industry sector with 2.8 points and agriculture with 0.1 point.
The fourth-quarter growth on the supply side was mainly propelled by manufacturing, trade, finance, and real estate.
Balisacan said the 6.5 percent expansion of the services sector was driven largely by the strong demand for communications, land and air transportation, and storage and services incidental to transport.
“Increased air traffic in the fourth quarter of 2013 was due to the additional flights and destinations of the country’s leading airlines and number of passengers and cargo for tourism and relief operations after super-typhoon Yolanda.”
Balisacan said the financial sector also came in strong in the fourth quarter with a growth of 9.9 percent.
“A stable business environment, a manageable inflation rate of 3.7 percent – leaning towards the low end of the target range – and low interest rates, as well as aid from other countries for those affected by typhoon Yolanda, have induced an increase in financial activity,” he said.
The 5.4 percent growth in other services was mainly driven by education and services, health and social work, and community services. The tourism sector’s gross value added reached P748.3 billion, 15 percent higher than in 2012.
In the industry sector, manufacturing served as the frontrunner, posting double-digit growth of 12.3 percent in the fourth quarter of 2013.
On the demand side, growth was driven by household consumption, which contributed 4.2 percentage points, and net exports, which contributed 1.6 points.
The export sector continued to post a positive growth in the fourth quarter at 6.4 percent, lower than the 8.6 percent in the previous year.
Merchandise exports increased by 6.2 percent mainly due to the strengthening of the global manufacturing sector in line with the recovery of the world economy.
Prospects In 2014
Secretary Balisacan said he is optimistic that the Philippine economy will remain strong and robust in 2014. “It will take some time for establishments in typhoon-affected areas to recover assets and regain momentum and this is expected to affect the growth in the first quarter of 2014,” said Balisacan.
He noted that the International Monetary Fund and the World Bank have higher growth expectations for the global economy. The IMF sees global activity growing by 3.7 percent in 2014 and 3.9 percent in 2015, while the World Bank projects global economic growth at 3.2 percent in 2014 and 3.4 percent in 2015. The Asian Development Bank sees the region growing at 6.2 percent in 2014.
“We believe the Philippine economy particularly the industry sector is in a very good position to take advantage of wider export markets as the government continues to implement reforms to reduce the cost of doing business in the country,” said Balisacan.
He expects agriculture and industry sectors to be vibrant this year as the government promotes linkages between the two sectors to increase value added as a key strategy identified in the Philippine Development Plan midterm update.
The construction of major infrastructure projects, particularly in the transport sector, is expected to add fuel to the growth this year and beyond.
Economy’s Resilience Cited
Malacañang hailed the country’s “impressive” 7.2 percent economic surge in 2013 despite facing a string of calamities. “A year of challenges did not deter us from impressive growth,” Presidential Spokesman Edwin Lacierda said.
He cited the “resilience of an economy that defied expectations, and the resilience of thousands of Filipinos, including the survivors themselves, who came together in the wake of calamities, as well as our people’s characteristic dynamism.”
“It is precisely because of these that we are confident that our countrymen will not only sustain, but accelerate the reform agenda that has led to these successes. We will not only revive and bolster the communities affected by calamities, but together, we will hasten our task of achieving lasting, inclusive growth that leaves no one behind,” he added.
At the Philippine Stock Exchange (PSE), the benchmark index immediately shed 8 points or 0.13 percent yesterday, opening at 6,061.79 and further fell below its 6,000 support level. The index, however, came up a bit after the government announced its economic growth numbers.
Astro del Castillo, managing director at First Grade Holdings, said external factors have turned off investors in the local equities market, but the country’s strong economic fundamentals remain to help withstand uncertainties in the coming trading days.
The country’s main stock index is still up more than 2 percent so far this year despite the emerging market selloff, while most others in Southeast Asia are in the red.
Highest Rate Since 2009
Finance Secretary Cesar V. Purisima said the 7.2 percent economic expansion last year is the country’s highest growth rate since 2010, above the 6 percent to 7 percent target.
The October to November GDP growth is the country’s eighth consecutive quarter with above 6 percent expansion since June 2010, he added.
The strong economic output in 2013 was due to strengthening business process outsourcing (BPO) and tourism sectors, Purisima said.
He also cited the country’s current account surplus which averaged 4.3 percent of GDP in the last eight years – $83.8 billion in reserves as of December, 2013 – compared with the ASEAN average of 2.5 percent.
But Purisima stressed the urgency of preparing the country against adverse effects of climate change
“Moving forward, our efforts in disaster risk management will include increasing microinsurance coverage, stimulating infrastructure development, maximizing the participation of local government units in funding, and providing a fiscal buffer against large-scale disaster responses,” he said. (With reports from Chino S. Leyco and Genalyn D. Kabiling)