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AMID
warnings by experts that growth was not sustainable and
questions about revisions in data, the country made
economic history with the better-than-expected gross
domestic product (GDP) growth of 7.3 percent in 2007 and
7.4 percent in the fourth quarter of last year.
The GDP
full-year growth not only met the high end of the
government’s forecast of 6.9 percent to 7.3 percent, but
was also the highest growth in the country’s history
since 1976, when it posted an 8.8-percent growth.
The
country also posted a 7.8-percent gross national product
(GNP) in 2007, which is also the highest in 31 years,
and a 6.5-percent growth in the fourth quarter of last
year.
Dr.
Romulo Virola, secretary-general of the National
Statistical Coordination Board (NSCB), said the robust
GDP growth may be attributed to the strong performance
of trade; agriculture; construction; private services;
and transportation, communications and storage (TCS).
Virola
said that on the demand side, the major factors that
contributed to growth were consumer spending, which rode
of the strong inflow of overseas Filipino workers (OFW)
remittances; and exports, which grew 10.5 percent in
October alone.
Economists, on the other hand, continue to question the
sustainability of the GDP growth. Former budget
secretary and now University of the Philippines Prof.
Benjamin Diokno was quick in saying that the GDP growth
is “not sustainable.”
Diokno
said the only reason that could make the 7.3-percent
full-year (GDP) a sound figure is the fact that the
third-quarter growth was revised to 7.4 percent from the
previous announcement of 6.6 percent—a difference that
is seen to be subject of debate in days to come,
considering that in past instances, revision of data
involved an upward or downward change of only a fraction
of a percent.
To
Diokno, among the figures that are suspect are those
posted by agriculture. It is a problem, he explained,
when those collecting data are the same people who will
use the data in the future. He stressed that to avoid
figures being “bloated,” independent data collectors
should be tapped.
Australian economic analyst Peter Wallace said one major
factor for the GDP’s swelling was the decreasing import
bill of the country, which
is actually a negative sign, he said, since lesser
imported capital equipment means less economic activity
for the future.
He said
a GDP at the 5.5 percent to 6 percent range would have
been healthier as long as the importation of capital
equipment is higher because “this is what we need.”
Wallace
also found puzzling that oil imports are down in 2007,
which is not logical for a fast-growing economy. When
economic activity is high yet the importation is down,
the inevitable conclusion, he said, is that there is
rampant smuggling.
“Unofficially, probably the imports are growing, too,”
he told the BusinessMirror.
Meanwhile, Alberto Lim, Makati Business Club executive
director, said the upper end of the government’s 6.3-
percent to 7-percent economic- growth projection for the
year is a bit exaggerated.
Lim said
the Philippines is not likely to sustain the level of
growth last year given the recession in the US, the
slowing down of exports and the closure of some firms
rendered uncompetitive by the sharp peso appreciation.
Diokno,
for his part, said a lower GDP growth rate is expected
in 2008 due to the global economic slowdown and the
absence of elections, which was one of the key factors
that increased government spending in 2007 and spurred
consumer spending.
The
doubts notwithstanding, Malacańang said on Thursday the
7.3-percent in 2007 is a “clear manifestation” that the
Arroyo administration’s economic strategies are correct.
Deputy
presidential spokesperson Anthony Golez said in a
statement the government will sustain the growth through
investments in social services and programs,
particularly in areas with the highest multiplier
effect, and infrastructure that would sharpen the
country’s competitive edge.
“These
investments have also structurally prepared the country
to weather the inevitable
US
recession, thereby mitigating the consequential effects
to our economy,” Golez said.
For his
part, former budget chief Diokno said, “The 2007 GDP
growth rate, assuming the official number is correct, is
not sustainable. In fact, the higher than long-run
growth rate could be a handicap because of the base
effect. Since the 2007 performance is way above the
long-run growth rate, the more difficult it is to top.”
Diokno
forecast a 5.0 percent 5.5 percent GDP growth rate for
2008, “assuming no severe weather disruption.” Assuming
severe weather disruption, he expects GDP growth rate
“to be in the neighborhood” of 4 percent.
“What is
noticeable is how the economy was able to grow at such a
rapid pace. A high growth [in 2007] could be a problem
this year,” Diokno said in a phone interview.
For his
part, University of the
Asia and the Pacific (UA&P) economist Prof. Victor Abola said
that though he projected that the country would post a
robust growth of 7 percent, he was still surprised that
the growth overshot 7 percent last year.
“I
expected growth to be high, but not that high.” Still,
Abola believes the fourth-quarter figure at least “is
quite true since the energy sales of Meralco and the
retail sales of Jollibee and San Miguel [Corp.]were also
robust.”
In a
phone interview, Abola said the slowdown in the United
States, high oil prices and the appreciation of the
peso will be among the country’s main problems in
2008. He expects the strong peso to “bite” into the
spending of OFWs and their families.
He
expects growth to post single-digit growth in 2008, with
a closer to 5-percent GDP growth. The country’s economic
performance in 2008, he said, would not be as “special”
as the performance in 2007.
National
Economic and Development Authority (Neda) Acting
Director General Augusto Santos, on the other hand, said
the weakness of the US economy and volatile oil prices
will present downside risks to growth in 2008.
The Neda
projects that in case of a 1-percent contraction in
absolute terms of the economic output of the US, the
Philippines’s GNP will suffer a contraction of 1.764
percentage points.
Santos
stressed, however, that a recession is not yet a reality
in the US. Given the fact that the US government is
willing to give a tax relief of $140 to $150 billion, or
roughly 1 percent of its economy, a recession may be far
off,
Santos
said.
He noted
that the total amount of the tax relief of the US is
already equal to the size of the Philippine economy.
“What is
important is that we have seen how the concerted efforts
of all the sectors of society contributed towards
ushering the country on a trajectory of accelerated
growth. While the uncertainties will remain in 2008,
increasing public-private sector partnerships will prove
to be potent in attaining the economic goals for this
year as well as in making this growth felt by all
sectors of the society,” Santos said in his speech.
The
services sector posted the highest growth among all
three sectors. Services grew 8.7 percent for the full
year and 9 percent in the fourth quarter of 2007.
Virola
said the full-year growth of services was the highest in
more than 50 years; its fourth-quarter growth was the
highest since 1982.
The
highest annual growth rate in the sector came from
finance at 12.3 percent; while the lowest came from
government services, at 3.3 percent.
In terms
of contribution to services growth, trade contributed
the highest at 3.41 percent followed by private services
at 1.51 percent; TCS, 1.48 percent; finance at 1.42
percent; ownership of dwellings and real estate, 0.58
percent; and government services, 0.29 percent.
Despite
the continued weakening of manufacturing, the industry
sector posted a 6.6-percent growth in 2007 and a
5.8-percent growth in the fourth quarter.
Mining
and quarrying posted the highest growth rate at 25
percent trailed by construction, 19.6 percent;
electricity and water, 7.2 percent; and manufacturing,
3.3 percent.
In terms
of contributions to the industry sector’s growth,
manufacturing still accounted for the biggest share at
2.47 percent followed by construction, 2.31 percent; and
mining and quarrying, 1.13 percent.
The
highest contribution to growth in manufacturing,
meanwhile, was accounted for by food manufactures at
2.17 percent; the lowest was machinery, except
electrical, at -0.02 percent.
The
agriculture, fisheries and forestry (AFF) sector, on the
other hand, posted 5.1-percent growth in 2007 and 5.8
percent in the fourth quarter.
The
highest growth in AFF was seen in forestry, with 12.2
percent growth; corn, 10.8 percent; and banana, 10.1
percent. The lowest growth rates were posted by sugar
cane, at -11 percent growth, and coconut/copra, with
-0.7 percent.
The
biggest contributions to AFF growth came from fishery at
1.57 percent; other crops, 1.27 percent; and palay, 1.02
percent. The lowest contributions to growth were coconut
with 0.02 percent and sugarcane with -0.28 percent.
(With M. de Leon) |
