PH growth slows, misses 2018 target
Credit to Author: The Manila Times| Date: Thu, 24 Jan 2019 16:25:27 +0000
The economy picked up in the last three months of 2018 but the marginal gain was not enough to lift full-year growth to within the government’s target.
High prices were blamed for 2018 gross domestic product (GDP) growth of 6.2 percent — lower than the downwardly-revised goal of 6.5-6.9 percent — but result was still described by economic managers as a “firm finish”.
The expansion — slower than the 6.7 percent recorded a year earlier — did not surprise as analysts had expected the 2018 mark to be missed.
“This is a firm finish that cements the Philippines’ standing as one of the fastest-growing economies in Asia. We are next to India, Vietnam and China,” economic managers said in a joint statement.
“From Q1 to Q3 of 2018, we overtook Indonesia and Thailand in terms of economic performance,” they added.
Still, Socioeconomic Planning Secretary Ernesto Pernia said that 2018 GDP growth could have hit the low end of the target had it not been for inflation, which at 5.2 percent for the year was above the 2.0-4.0 percent goal.
The Philippine Chamber of Commerce Industry also blamed inflation but expressed optimism that lower oil and food prices would boost the economy this year.
Trade Secretary Ramon Lopez, meanwhile said the 6.2-percent GDP result was “reasonably good growth” that was driven by investments and government initiatives.
This could allow the country to weather “expected trade challenges and [a] foreseen global slowdown brought about by the US-China trade tensions, world oil prices and geopolitics,” he added.
Fourth quarter result
National Statistician Lisa Grace S. Bersales told a briefing that fourth quarter growth came in at 6.1 percent, up from the downwardly-revised 6.0 percent for July-September but still lower than the 6.5 percent posted a year earlier.
The Philippine Statistics Authority (PSA) said the main drivers of October-December growth were construction, trade and repair of motor vehicles, motorcycles, personal and household goods, and other services.
Industry was said to have posted the fastest growth at 6.9 percent, followed by services (6.3 percent) and agriculture (1.7 percent).
Economic managers said that on the supply side, industry growth was fueled by a surge in construction but added that manufacturing was “an area of concern” as it only grew by 3.2 percent in the fourth quarter from 7.9 percent a year earlier.
They pointed to weak business sentiment and policy uncertainties, and sluggish exports amid a global economic slowdown.
On the demand side, household consumption was said to have slowed to 5.4 percent in the fourth quarter from 6.2 percent in the comparable 2017 period.
“We had high inflation rates last year especially in the third quarter and the first two months of the fourth quarter. Inflation affects consumer spending and government spending,” Pernia noted.
The PSA said government spending grew by 11.9 percent in the fourth quarter, slower than the 12.2 percent in the previous year. On an annual basis, it grew by 12.8 percent from 7 percent, driven by spending on personnel services, maintenance and operating expenses, and social protection services such as the Pantawid Pamilyang Pilipino Program.
2019 outlook
In their statement, economic managers said the government would remain vigilant of inflation risks and was fast-tracking preparations to implement the rice tariffication law.
“For the year ahead, we expect household consumption to recover as inflationary pressures subside, given a subdued outlook on international oil prices and the expected reduction in rice prices from the enactment of the Rice Tariffication Law. This law would generate tariff revenues that will be given to our farmers, boosting their productivity,” they said.
“To protect lower-income households from [the] Train (Tax Reform for Acceleration and Inclusion) law’s adverse effects on consumption, the unconditional cash transfers and fuel vouchers should likewise be implemented in a timely manner,” they added.
Economic managers warned that a re-enacted budget would affect government spending in the near term.
“This implies that the government would not be able to quickly execute programs and projects under the proposed 2019 budget. The 45-day ban on state spending prior to the May 2019 elections could also further delay implementation of infrastructure projects,” they said.
Other measures that should be done this year include addressing policy uncertainties, increasing macro-competitiveness by enhancing the efficiency of transport, communications and the overall logistics network, and attracting more investments.
“Hence, we strongly favor the moves of Congress to amend the Foreign Investment Act, the Retail Trade Act, and the Public Service Act. In addition to the massive investments in infrastructure that will help address the logistical concerns of the sector, these amendments will help attract foreign investments and manufacturing,” the economic team said.
Potential growth drivers for 2019 would be the upcoming 2019-midterm elections and preparations leading to the Southeast Asian Games in November.
“The creation of the Bangsamoro Autonomous Region would likewise open up growth prospects both for the region and for the wider economy,” economic managers said, adding that “for 2019, we call for a cohesive reform agenda for the country.”
“As we near the release of the Socioeconomic Report 2018 and mid-term updating of the Philippine Development Plan 2017-2022, we hope that the whole of government will be on the same page in addressing the challenges of the different sectors.”
FROM REPORTS BY ANNA LEAH E. GONZALES TYRONE JASPER C. PIAD
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