PH economy grows 6.8% in 1st quarter

The Philippine economy accelerated in the first three-months of the year despite higher consumer prices, the National Economic and Development Authority (NEDA) said yesterday. The Philippine Statistics Authority (PSA) reported that the country’s economy, as measured by its gross domestic product (GDP), increased by 6.8 percent in January to March, higher than the 6.5 percent in the same

period last year.

But end-March GDP is slower than the Duterte administration’s target range of 7.0 percent to 8.0 percent.

In a briefing, Socioeconomic Planning Secretary Ernesto M. Pernia said the Philippines remained one of the best performing economies in Asia, next to Vietnam’s 7.4 percent, same as China, and higher than Indonesia’s 5.1 percent.

Inflation, the spoiler Pernia, however, said that the growth would have fallen well-within the government’s target for the year if not for the spikes in inflation, which accelerated beyond their target of 3.0 percent to 4.0 percent.

Inflation in April reached 4.5 percent, the highest in over five years.

“This is the tenth consecutive quarter that the economy was able to achieve an output expansion of 6.5 percent or better. It is at par with market expectations — many of you have already been guessing 6.8 or 6.9 percent — and close to the low-end of our full-year growth target,” Pernia said.

“Inflation is the spoiler, that is why we really need to focus on inflation especially because it is the number one concern expressed by Filipinos in surveys,” he added.

The economic manager, however, is confident that inflation will gradually ease in the coming months.

Checking inflation

“We need to address sources of rising inflation, even if the uptick brought by the temporary effects of TRAIN (tax reform for acceleration and inclusion) are expected to gradually ease this year,” Pernia said.

“In the short term, we need to hasten mitigating measures such as the Unconditional Cash Transfer to the poorest 50 percent of households, plus the PantawidPasada subsidy for jeepney drivers,” he added.

PSA data showed that public spending jumped 13.6 percent in the quarter ending March from 0.1 percent in the previous year.

Industry grew by 7.9 percent, while services rose 7.0 percent, and agriculture increased 1.5 percent.

“This performance demonstrates that we have firmly laid the groundwork for reforms in some of the sectors of the economy,” Pernia said.

Better GDP hoped But despite challenges, Pernia said that the government is hopeful that the country’s GDP would hit at least the lower end of the full year target range, citing the 7.0 percent to 8 percent is “doable.”

“Domestic demand is expected to increase in view of the recently approved tax reform package, which is deemed to boost income and consumption of tax payers. However, we need to boost investor and consumer confidence to sustain this growth,” Pernia said.

Finance Secretary Carlos G. Dominguez III, meanwhile, said the country is on its way to achieving its targets for high growth and financial inclusion for the rest of the Duterte presidency.

Dominguez said the government enjoys enough fiscal space to further accelerate spending on its core programs — infrastructure and human capital development — meant to keep up the Philippines’ status as one of Asia’s fastestgrowing economies.

“President Duterte’s commitment to attaining an investment-led and inclusive economy via a massive public spending strategy would usher in what the Asian Development Bank (ADB) has forecast to be the ‘golden age’ of the Philippines’ economic growth,” Dominguez said.

‘Supercharging’ the economy

Dominguez noted the government’s investments in physical and human infrastructure would “supercharge” the economy; attract more investments, create a lot more jobs, especially for our young workforce; and liberate millions of Filipinos from poverty.

The “Build, Build, Build” program is now in full swing, Dominguez bared, with 75 big-ticket infrastructure projects worth $170 billion and designed to reverse regional underdevelopment and income inequality by creating growth corridors all over the country.