Phil. Economy 2012 Outperforms Other ASEAN Economies Amid Global Uncertainty

Phil. economy 2012 outperforms most of its neighbors in Asia

The Philippines has remained resilient to the effects of uncertainties in the global economy than most peers in the Association of Southeast Asian Nations (ASEAN) on the back of strong domestic demand growth and less reliance on exports.

With an increase in gross domestic product (GDP) of 7.1 percent in the third quarter, the Philippines outperformed most of its neighbors.

GDP growth for the first three quarters averaged 6.5 percent, well above the official 5 to 6 percent growth target set in 2012.

Socioeconomic Planning Secretary Arsenio Balisacan said the country’s recent economic growth is remarkable because it is higher than any other ASEAN country.

He said the 6.5-percent figure is also much closer to the country’s aspirational target of 7 to 8-percent annual real GDP growth.

“The issue of uncertainty has been with us since last year. I think we just have to find how to live with that. The trick is really diversifying and ensuring growth of the domestic economy,” he noted.

Balisacan said even as the Philippines continues to depend on semiconductor and electronics for exports growth, it needs to expand product lines.

“The beauty of that is, it will make us less vulnerable to any shocks…There are many opportunities out there. The rapid urbanizing areas of the Asian region would mean high demands for foods, agro processed products,” he said.

The economic expansion continues to be broad-based, as almost all sectors posted higher year-on-year growth rates.

Government data indicates that industry and services sectors remained the biggest drivers of economic growth. The seemingly weather tolerant agriculture sector posted double growth rate in the third quarter.

On the demand side, increased consumer and government spending, increased investments in construction and higher external trade contributed to the highest growth in the third quarter.

“It is really the domestic economy that is growing and is contributing increasing to the (economic) expansion,” said Balisacan, also the National Economic and Development Authority (NEDA) Director General.

He said a 4.6-percent growth in GDP is very unlikely to be achieved in the fourth quarter to hit this year’s growth target, in the absence of an “economically traumatic experience” during the period.

The impacts of typhoon “Pablo” on the domestic economy will be only minimal, with some of them will still be felt in the first half of 2013, he added.

Phil. Economy 2013, 2014 Outlook

Economic planners expect the Philippine economy to accelerate to 6 to 7 percent next year and 6.5 to 7.5 percent in 2014.

“We hope to see a more vibrant industry sector. We see an improved manufacturing sector buoyed by the semiconductor and electronics industry, as the world economy is expected to recover between 2013 and 2014,” said Balisacan.

For the services sector, the continuous expansion in the information technology-business process outsourcing (BPO) industry, tourism, financial intermediation and trade are seen to fuel growth.

On the demand side, household consumption will remain robust and the expected expansion of exports and construction will further boost growth.

“I think seven percent next year is not really very difficult to achieve. The momentum is already there,” said Miguel Varela, president of the Philippine Chamber of Commerce and Industry (PCCI).

The country’s largest business group also expects the economy to grow further over seven percent in 2014, banking on the completion of big PPP projects.

Varela said the attainment of this high economic growth largely depends on the implementation of policies and programs designed to help the country attract or retain investments.

The Philippines needs to make its investment incentives competitive with other ASEAN members.

“If we open up this a little and compete with other countries to be at par with them, more investments will come in here. They look at Filipinos as more flexible, we speak English very well,” he noted.

Also, the government should continue promoting good governance and combat corruption. It also needs to prioritize securing a strong domestic industrial base that will become the anchor for investment growth.

Varela also urged the government to continue its policies on economic development, good fiscal management, transparency efforts against corruption, and spends well money for infrastructure particularly on public-private partnership (PPP) projects.

“We should take care of investors… We should make necessary adjustments if we have to. It’s a competition, we cannot just depend on blessings,” he said.

But while the business group is optimistic about the Philippine growth potential for next two years, the country should be watchful of international developments.

“We will not just ignore these developments as far as sustaining the growth. We have to be more competitive, we should attract more of these investors,” Varela added. (Leslie D. Venzon/PNA/LAP/LDV).