A Philippine official says the country no longer deserves to be branded the “sick man of Asia,” after its economy grew more than 6 percent for a third consecutive year.
Hampered by natural disasters, growth of the $300-billion economy slowed to 6.1 percent in 2014, but still outpaced most other countries in Asia, officials said on Thursday.
The 2014 performance ranks the Philippines as the second-fastest-growing Asian country behind China, which posted a 7.3-percent growth, and ahead of Vietnam’s 6-percent growth, Socioeconomic Planning Secretary Arsenio M. Balisacan said. The Philippine economy grew 7.2 percent in 2013.
“Our country can no longer be called the sick man of Asia,” Balisacan said. “Our economic growth is becoming more competitive with our East and Southeast Asian neighbors.”
The Philippines has been blighted by decades of corrupt governments, and the archipelago nation is also vulnerable to frequent natural disasters, such as typhoons and floods. Investor perceptions of the country have improved under the government of President Aquino, who was elected in 2010 with promises to combat endemic graft and poverty.
“The numbers tell us that we are moving in the right direction,” Balisacan said. “Clearly, the economic policies and strategies we are implementing to achieve sustained and inclusive growth are bearing fruit,” he said.
Finance Secretary Cesar V. Purisima on Thursday said higher growth of 6.9 percent in terms of the gross domestic product (GDP) in the final three months of 2014 was made possible by higher government spending during the period. He also said lower oil prices in the fourth quarter also contributed to accelerated GDP expansion, as consumption, driven by savings of consumers, picked up pace.
GDP expansion in the fourth quarter last year averaged 6.9 percent, a strong rebound from the third-quarter figure, which registered at only 5.3 percent.
This brought the full 2014 GDP growth rate to 6.1 percent.
“The robust, broad-based growth bodes well for this administration’s inclusive development agenda, as all sectors, including agriculture, contributed to the acceleration of the economy. With extensive fiscal space, government spending reversed itself to a 9.8-percent uptick in the fourth quarter, while acceleration in the services sector grew by 6.0 percent owing to a boost in public administration and defense,” Purisima said.
He said the government was able to increase spending by giving incentives to disbursements and by creating fiscal space to free up more cash to boost spending on public investments, like infrastructure.
Available figures from the Bureau of the Treasury show the government spent P306.19 billion last October and November. This number was seen to increase as expenditures last December are released.
“We are pleased to note that our investments in agricultural infrastructure and technology are bearing fruit with higher agricultural output for fourth quarter. The industrial sector maintains its fast-paced growth, with construction expanding by double digits and manufacturing remaining as the biggest contributor to the sector’s growth at 7.3 percent. Lower oil prices contribute to an even more robust growth on the demand side, with consumption accelerating to 5.1 percent and net exports picking up by 47.4 percent,” he said.
Purisima said the priority bills in Congress, like the fiscal incentives rationalization bill and the amendments to the build-operate-transfer law and the Foreign Investments Negative List, are expected to further fuel growth in the medium term by providing the government with additional revenues. In a separate development, Malacañang vowed to continue the economic reforms to ensure that the growth track is sustained.
“The government shall remain vigilant against external risks that would undermine the gains of the economy,” Communications Secretary Herminio B. Coloma Jr. said. “We will continue to work toward enhancing the people’s faith in the bureaucracy and their support for the government’s efforts to attain lasting peace,” Coloma added.
In a Palace briefing on Thursday, the secretary said the Office of the President was taking note of “the stellar performance of the Philippine economy that posted the second-fastest annual GDP growth in Asia last year at 6.1 percent.”
He cited the Neda report showing growth in the fourth quarter of 2014 averaging 6.9 percent, and that such growth was broad-based, as all three major sectors—agriculture, industry and services—showed “positive and robust growth.”
Coloma said the impressive fourth-quarter GDP expansion was also buoyed by the significant hike in government spending, especially during the last three months of 2014. “We affirm Neda’s projection that the country’s economy will gain further traction this year as the economic policies and strategies of the government to achieve sustained and inclusive growth are bearing fruit,” the secretary added.
Asked by the BusinessMirror if President Aquino was disappointed in missing the government’s growth target of 6.5 percent up to 7.5 percent, Coloma acknowledged that the Palace “would have welcomed” something close to the 6.5-percent target.
Still, he said, they remain “more optimistic” this year, considering that the Philippines’s record in posting the second-highest growth performance among Asian countries.
“We targeted growth ranging from 6.5-percent up to 7.5 [percent]. But considering that there was a significant rebound from only 5.3-percent GDP growth in the third quarter to 6.9 percent in the fourth quarter, considering further that the growth was broad-based and includes all three main sectors, namely, agriculture, industry and services, and considering, finally, that our country is the second-fastest-growing economy in the region, I think we have all the reasons to become more optimistic about the future growth projections in terms of GDP,” Coloma explained.
In a separate statement Spokesman Edwin Lacierda said that the “welcome news about our economic expansion once more reaffirms the resounding truth that good governance is good economics.”
Dave Cagahastian, Butch Fernandez, Estrella Torres, AP