Yearender: Philippines expects slower GDP growth this year
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E-mail Xinhua, December 28, 2014
Growth of the Philippine economy, one of the fastest growing in the Asia Pacific region, will be slower this year compared to that of last year, according to the Philippine government's top economist.
In an earlier statement, the country's Socioeconomic Planning Secretary Arsenio Balisacan said that the Philippine economy grew by only 5.3 percent in the third quarter of 2014, much slower than the 7 percent expansion in the third quarter of 2013.
Balisacan said that the manufacturing sector contributed the most to the growth in the third quarter despite a deceleration in its gross value added from 8.9 percent in 2013 to 7.2 percent in 2014.
He said that the biggest contributor to growth was net exports which grew by 125.7 percent.
Supported by the strengthening of the global manufacturing industry, the country recorded a trade surplus in the third quarter of 2014 amounting to 6.9 billion pesos (157 million U.S. dollars), a recovery from the 26.9 billion pesos deficit a year ago.
The growth in exports was mainly driven by merchandise exports largely supported by the growth in semiconductors, ignition wiring sets, and articles of apparel and clothing, Balisacan said.
The biggest decline was recorded in agriculture, fishery and forestry sector with a decrease of 2.7 percentage points.
Given the third quarter's performance, GDP growth in the first three quarters is estimated at 5.8 percent.
Blisacan, who is also director general of the National Economic and Development Authority (NEDA), the country's top economic policy making agency, has admitted that even hitting the low end of the growth target for the year would pose a big challenge.
He said that the country has to grow by at least 8.2 percent in the fourth quarter in order to attain a yearend growth of 6.5 percent.
The government has earlier forecast that the economy would grow by 6.5 percent to 7.5 percent this year.
Last year, the Philippine economy grew by 7.2 percent, the highest in Southeast Asia and second only to China's 7.7 percent in the whole of Asia.
The Philippine economy grew by only 5.7 percent in the first quarter and 6.4 percent in the second quarter.
PHILIPPINES-CHINA TRADE
In an international business forum held in Manila in October, Balisacan said that the country's bilateral trade with China has risen tremendously over the past four years.
Balisacan said that the Philippines welcomes potential investments from China in manufacturing, logistics and infrastructure, tourism, agribusiness and power generation.
"China is a major economy. It's a big country, a major global player. Our country is connected to China directly or indirectly through a global supply chain," he said. "Nobody can ignore this kind of relationship with this highly globalized economy. We are connected."
Compared to 10 billion U.S. dollars in 2010, China's total trade with the Philippines in 2013 reached about 15 billion dollars. For the first seven months of the year, China's total trade with the Philippines stood at about 10 billion dollars, he added.
In foreign direct investment (FDI) sector, Balisacan said China 's FDI in the Philippines is still minuscule, rising to 9.6 million pesos in the first half of 2014 from only 1.9 million pesos in 2012.
GAINS AND CHALLENGES
Despite a slower-than-expected growth, the country's macroeconomic fundamentals have remained strong, data showed. For the first eight months of this year, the net inflows of FDI to the Philippines reached 4.3 billion U.S. dollars although the figure is still low compared to FDI inflows in other Asian economies.
Philippine merchandise exports also grew by 15.7 percent for the month of September alone, once again topping trade-oriented economies in East and Southeast Asia since June, according to the NEDA.
Consumer spending in the Philippines also increased to 1.22 billion pesos in the second quarter of 2014 from 1.21 billion pesos in the first quarter.
According to the Bangko Sentral ng Pilipinas (BSP), the country 's central bank, the business outlook on the economy turned more upbeat with the overall confidence index (CI) rising markedly to 48.3 percent in the fourth quarter from 34.4 percent in the third quarter.
The BSP also said that inflation decelerated slightly to 4.3 percent year-on-year in October from 4.4 percent in September but is still within the BSP's forecast range of 3.7 to 4.6 percent for the month.
Despite strong fundamentals, the Philippine government said it will continue implementing reforms to further improve business climate, which is crucial to attract more investments into the country and sustain a higher inclusive growth.
With the entry of more foreign investments, the government expects the unemployment rate to improve to 6.7 percent next year and 6.6 percent in the following year from the 7 percent average in the past few years.
The government also aims to improve poverty incidence as a percentage to population from 25.2 percent in 2012 to 19 percent by 2016. Endi
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