Economy grows 6.2% in 2018 Duterte gov’t eyes 8% GDP growth in 2019
The country’s Gross Domestic Product (GDP) grew by 6.2 percent in 2018, its lowest annual expansion in three years, the Philippine Statistics Authority (PSA) reported Thursday.
Despite the growth slowdown, the administration is still serious in aspiring for a growth of 7 to 8 percent for this year, which will be backed by its massive infrastructure program, known as “Build, Build, Build” program, as well as efforts to improve the investment climate in the country, Socioeconomic Planning Secretary and National Economic and Development
Authority Director General Ernesto Pernia said.
This means the average GDP growth per quarter starting the January-March period should not fall below 7 percent, unless an extraordinary recovery or growth is recorded in one or two quarters, he said.
Last year, GDP growth per quarter averaged around 6.1 to 6.6 percent. In the fourth quarter, the economy grew by 6.1 percent.
“The 7-8 percent is an aspiration. No administration has yet achieved that kind of economic growth over time. Maybe in a span of one or two years that was achieved, but not on a sustained manner,” Pernia said.
He said the Philippine economy “has remained stable,” while also blaming the slowdown to the sluggish growth of agriculture and manufacturing sector.
It was also reported Thursday that the country's agriculture sector crawled to a 1 percent growth in 2018, way slower than the 4 percent growth it had in 2017.
Agriculture Secretary Emmanuel Piñol attributed this to the damage the farm sector has incurred from several typhoons, including Supertyphoon “Ompong,” as well as the lack of budget.
Pernia, on the other hand, said that had the Department of Agriculture (DA) executed the importation of more rice and other agriculture products immediately after it was told to do so, it could have been “beneficial” to the overall growth of the Philippine economy.
It was recalled that the Duterte administration was originally expecting the 2018 GDP growth to be at the range of 7 to 8 percent, before it eventually tempered its expectation and pegged its forecast to 6.5 to 6.9 percent.
Among the major economic sectors during the fourth quarter of 2018, industry had the fastest growth with 6.9 percent. This was followed by services, which grew by 6.3 percent, and agriculture, by 1.7 percent.
On the supply side, the robust performance of industry, growing at 6.9 percent, was fueled by the surge in construction as it grew by double digits to record its fastest pace since the first quarter of 2013.
“That’s a good indicator of the continuing driving force of the 'Build, Build Build' program,” Pernia said.
Manufacturing, on the other hand, is an “area of concern", he said. For the last quarter of 2018, it grew only by 3.2 percent, a deceleration from 7.9 percent during the same period in 2017.
This is due to weak business sentiment and policy uncertainties, coupled with sluggish export demand amid a global economic slowdown.
“To remedy this, the government needs to first address the policy uncertainties, increase macro-competitiveness by enhancing the efficiency of transport, communications, and the overall logistics network. To ensure inclusivity, we need to focus on the integration of industries between small and medium enterprises on one hand, and large establishments on the other,” Pernia said.
NEDA Undersecretary for Planning and Policy Rosemarie Edillon said the country also needs to attract more investments. Hence, she said the agency strongly favors the moves of Congress to amend the Foreign Investment Act, the Retail Trade Act, and the Public
Service Act.
In 2018, Net Primary Income (NPI) grew a bit by 0.9 percent. As a result, Gross National Income (GNI) posted a growth of 5.2 percent. On an annual basis, GNI grew by 5.8 percent, while NPI’s growth is at 3.7 percent.
With the country’s projected population reaching 107.0 million in the fourth quarter of 2018, per capita GDP and per capita GNI grew by 4.4 percent and 3.6 percent, respectively.
Meanwhile, per capita Household Final Consumption Expenditure (HFCE) grew by 3.8 percent.
Moving forward, Pernia said the administration will continue to be on the lookout for downside risks such as the US-China trade dispute dampening global demand, with higher tariffs and protectionist policies stifling investment and disrupting global value chains.
And since the administration is largely banking on the 'Build, Build, Build' program, among others, on achieving higher growth this year, another risk would be the failure of the government to re-enact the 2018 budget as the basis for the national spending this year.
"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," Pernia said.
Meanwhile, he cited that other potential growth drivers this year would be the upcoming 2019-midterm elections and the 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, he said.