The government is confident the Philippine economy will attain its 7-percent to 8-percent growth target this year and in 2016, according to the National Economic and Development Authority (Neda).
Neda Director General and Socioeconomic Planning Secretary Arsenio M. Balisacan said a 7-percent to 8-percent growth in terms of the gross domestic product (GDP) is “achievable,” despite such risks as the sluggish global demand, as well as other “surprises” that could crop up in the next two years.
“For this year and next, we are targeting 7 [percent] to 8 percent. We believe that, based on our analysis of the growth trends and the information available, our economy has moved into a long-term growth path, [where] 7 percent is quite sustainable and achievable,” Balisacan said.
The Neda chief said that growth in 2015 will be driven by domestic, as well as government, spending. Household consumption spending will continue to be a source of growth since this accounts for 70 percent of the Philippine economy based on an analysis released by the World Bank.
Government spending, Balisacan said, is expected to increase on the back of increased spending for various projects such as infrastructure for the Yolanda corridor and election spending toward the end of the year.
“Amid the lingering and uneven external conditions, the economy is likely to draw its vigor from the
domestic front. On the supply side, the agriculture and fishery sector is seen to continually grow due to rice- and corn-yield improvements, resurgence of fishery, and the moderate expansion of livestock and poultry,” Balisacan said.
Meanwhile, Balisacan said the recent incidence of violence in Mindanao, where over 40 members of the Philippine National Police (PNP) Special Action Force were slain, should not have a significant impact on the economy this year.
The Neda chief said Mindanao only accounts for 14 percent of GDP. Luzon, including Metro Manila, accounts for 60 percent of GDP and the Visayas accounts for the remaining 26 percent. However, Balisacan said, armed conflicts, particularly in Mindanao, exact an economic toll measured in terms of lost opportunities to benefit from the rich resources of Mindanao.
He also said that what is important at this point is for the government to resolve the issue immediately to prevent any untoward impact on the economy.
“I think we should be able to put a closure to this issue quickly because that obviously will raise uncertainty, and any uncertainty or even just a perception of risk is bad for business, is bad for confidence. But I don’t think that it will, at this point, have any significant impact on investment. But again, its the closure, we need to have this closure as soon as we can,” Balisacan said.
Economic growth in 2014
In 2014 the Philippine economy posted a growth of 6.1 percent, the slowest since 2011, when the economy posted a full-year economic growth of 3.7 percent.
Basilican said the slower full-year economic growth was largely due to the lackluster economic performance in the first three quarters of the year. The country’s GDP growth in the first to third quarters were significantly affected by the government’s underspending.
However, a recovery in government spending in the last quarter of 2014 boosted growth in the fourth quarter to 6.9 percent, an estimate that was above market expectations.
The full 2014 economic expansion ranked the Philippines as the second fastest-growing economy in Asia, while its fourth-quarter growth performance placed the country as the third fastest in Asia for the period.
The fastest-growing economy in Asia in terms of full-year and fourth-quarter growth was the People’s Republic of China with a growth of 7.4 percent and 7.3 percent, respectively.
“Overall, the Philippine economy’s performance in 2014 and the preceding years starting in 2010 shows how our country can no longer be called the ‘sick man’ of Asia. Our economic growth is becoming more competitive with our East and Southeast Asian neighbors. We have avoided the dreaded boom-and-bust cycle that has hounded our economy for decades,” Balisacan said.
The Philippine Statistics Authority (PSA) said the robust performance of the Industry sector, particularly by manufacturing and construction and supported by the trade, real estate, renting and business activities, and transport, storage and communication, boosted the country’s GDP.
The PSA said gross national income (GNI) slowed to 6.3 percent in 2014, from 7.5 percent the previous year, with the deceleration of net primary income to 7.3 percent in 2014 from 9 percent in 2013. For the fourth quarter, GNI decelerated to 6.3 percent in 2014, from the previous year’s 7.2 percent, with the slowdown of NPI by 2.8 percent from a double-digit growth of 12.3 percent the previous year.