The Philippine government is optimistic that prospects for 2012 and the near term are positive, given the current performance and significant developments in the local and global economies.
NEDA has identified measures to boost exports such as diversification of exports and policies for closer integration with
fast-growing ASEAN economies.
The services sector is expected to support growth, particularly real estate. Production in the agriculture sector will be boosted by the implementation of the Food Staple Self-Sufficiency Roadmap for 2011-2016.
Private consumption will be driven by increased spending of households in the year-end, particularly on items related to food and utilities.
Spending will be supported by broadly stable commodities prices and consumer sentiment indicates more optimism for 2012, said Paderanga.
The domestic economy grew by 3.6 percent in the first three quarters of 2011, lower than the 8.2 percent growth in the same period last year.
Sec. Paderanga noted that the country’s growth in 2011 was affected by the global economic slowdown amid uncertainties in Europe, continuing weakness of the US economy, and disasters in Japan, which led to weak exports.
The domestic growth was weakened by the contraction in the construction sector, which was pulled down by lower government spending, given the process improvements and project reviews for public construction projects.
On the supply-side, the services sector remained the largest contributor to growth in the first three quarters of 2011 with a 4.7 percent expansion.
Agriculture production has been sustained as the sector continued to recover from the El Niño in 2010 and despite the typhoons in the third quarter that caused losses and damages in the sector.
The industry sector decelerated to 1.4 percent as the decline in construction and utilities weighed down the sector’s growth.
On the demand side, growth was driven mainly by household expenditure boosted by consumer confidence, manageable growth in prices of basic commodities and sustained inflow of remittances from overseas Filipinos.
Total exports declined by 3.7 percent due to slow pickup from the supply-chain disruptions caused by disasters in Japan, weaker demand from major trading partners that are currently experiencing economic slowdown,
and currency appreciation.
The Philippine government has maintained its gross domestic product growth (GDP) forecast of 4.5 to 5.5 percent for 2011 and 5 to 6 percent in 2012.
Meanwhile, the World Bank (WB) is expecting economic growth to moderate at 3.7 percent in 2011, weighed down by weak global demand as well as low public spending in the first three quarters of the year.
“Our projection hinges on the successful implementation of the government’s disbursement acceleration program and an acceleration in private consumption and investment, which have begun to grow faster in the last quarter,” WB country economist Karl Chua.
Growth in 2012 is projected to improve to 4.2 percent in line with regional forecasts. Higher 2012 growth hinges on improvement in exports, acceleration of public-private partnership (PPP) projects and private sector investment, and a full recovery of public spending.
Chua noted that the government is instituting important measures to improve transparency and accountability in public spending. Once these institutional reforms are in place, spending is expected to fully recover at cost-effective levels with more resolute impact on the country’s growth and development, Chua added.
“The country is well-insulated from the global financial crisis owing to a significant improvement of macroeconomic fundamentals and regulatory reforms already in place following the Asian financial crisis of 1997-98.”
However, the OECD Southeast Asian Economic Outlook predicted a higher growth for the six Southeast Asian economies — Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam — at 5 percent for 2011 and 5.6 percent in 2012.
The OECD report noted that global uncertainties and natural disasters shed a negative light on the growth prospects of the region as the overall Southeast Asia will have a solid growth performance through 2016.
As growth in external demand moderates for the region, ASEAN economies are turning towards domestic drivers of growth in the medium term and are beginning to explore ‘green growth’as an alternative strategy for long-term sustainable development.