The Philippines is the fastest growing economy in Southeast Asia as its the gross domestic product (GDP) grew by 7.5 percent in the second quarter of 2013 compared to the period last year.
Socio-economic Planning Sec. Arsenio Balisacan stressed this significant economic growth is the fourth consecutive quarter that the GDP has been expanding above 7 percent.
“We have been experiencing growth of above 6 percent since the first quarter of 2012,” noting that the second quarter expansion was above the 6-7 percent target set by the Development Budget Coordination Committee (DBCC) this year,” said Balisacan.
While the first quarter growth was slightly higher at 7.7 percent, this 7.5 percent second quarter growth is well within the target range of 7 to 8-percent GDP growth as originally outlined in the Philippine Development Plan or PDP for 2011 to 2016.
“This only confirms that the Philippine economy is now on a higher growth trajectory and the fastest growing economy among emerging economies in the ASEAN region,” said Balisacan.
The 7.5-percent growth, which is the same as that of China, surpasses the growth rates of the other economies in the ASEAN region.
Indonesia grew by 5.8 percent, Viet Nam by 5 percent, Malaysia by 4.3 percent; Singapore by 3.8 percent, and Thailand by 2.8 percent.
“Our growth rate is significantly higher than that of Hong Kong with 3.3 percent, Japan with 2.6 percent, Chinese Taipei with 2.5 percent, and South Korea by 2.3 percent,” said Balisacan.
Baliscan also pointed out that the composition of Philippine economic growth shows signs of an economy that is in the process of rebalancing, moving from being largely consumption-driven to becoming investment-led and industrialized, with the ability to provide higher quality jobs for Filipinos.
Over the last three quarters, capital formation has been growing more rapidly than household consumption and the growth of industry has so outpaced that of the services sector, said Balisacan. Double-digit growth rates were noted in fixed capital and the manufacturing subsector in the last quarter.
On the demand side, household and government spending account for the bulk of GDP as investments were growing and taking the lead in the medium term, given its double-digit growth for the past two quarters, said Balisacan.
“We are able to grow at a fast pace despite the contraction in exports. This internal dynamism indicates greater consumer and business confidence in the domestic economy, as we have continued to keep our macroeconomic fundamentals in check.”
“While other economies that were growing at a fast rate are now decelerating due to global slowdown, the Philippine economy has shown an ability to withstand external shocks,” said Balisacan.
However, Balisacan underscored the need to address the agriculture sector which slightly contracted for the first time since the first quarter of 2012, even as some subsectors within agriculture posted growth.
Corn and palay production declined by 25.9 and 1.8 percent, respectively, in the second quarter of 2013 due to the intense heat experienced in Ilocos and Cagayan Valley regions and farmers harvesting their crops in advance in anticipation of the drought.
Balisacan said the strong performance of various subsectors has tempered the contraction in the agriculture sector.
The fisheries subsector, which comprises almost one-fifth of the sector, grew by 3.3 percent, while poultry and livestock expanded by 6 and 3.9 percent, respectively.
The contraction in agriculture confirmed NEDA’s earlier observation in the April 2013 round of the Labor Force Survey where employment in agriculture-related activities registered a loss of around 624,000 workers from a year ago, compared to about 224,000 and 380,000 additional employment generated in the industry and service sectors, respectively.
Balisacan said the seasonality in the agriculture sector poses a challenge to growth and employment. He stressed that need to diversify agricultural production and to move towards further processing of agricultural products particularly food.
“We are pleased that overall, our economic performance in the second quarter of 2013 indicates that we are on track with our targets. Our strategic initiatives as outlined in the PDP continue to be implemented and are bearing fruit,” he said.
Balisacan said that with strong macroeconomic fundamentals, the country has the means to manage risks that arise with volatilities, including those of the stock market and the Philippine peso.
He also noted that inflation remains stable, interest rates continue to be low and with strong current account to cover 12 months worth of imports.
“The increased diversification of exports as indicated by the decline in the share of electronic products from 70 percent to 50 percent of total exports has made us less susceptible to trade-related shocks.”
“While we are not completely immune to external shocks, our positive actions that have facilitated economic restructuring and rebalancing have given us greater resiliency.”
Balisacan said that the government is committed to sustaining this growth and making it more inclusive so that every Filipino benefits from and contributes to development.