Philippines GDP grows 6.8% for year

Robust domestic demand underpinned 6.6% growth in the October to December period

The Philippine economy expanded at a brisk 6.8 per cent annual rate in 2016, Economic Planning Secretary Ernesto Pernia said yesterday. But the country is vulnerable to policy shifts in Washington and at home.

Economic Planning Secretary Ernesto Pernia said that robust domestic demand underpinned 6.6 per cent growth in the fourth quarter, helping to offset a contraction in agriculture and slowing government spending.

The 6.8 per cent expansion for the year was at the high end of the government’s target of 6.0 to 7.0 per cent growth. Growth in the past seven years has averaged 6.3 per cent.

The country’s brash-talking president, Rodrigo Duterte, inherited a relatively vibrant economy when he took office in June, pledging to slash the poverty rate. But investors are wary of his brutal anti-drug campaign, which has left more than 7,000 dead, his anti-US rhetoric and erratic comments including threatening to declare martial law as part of his war on drugs. Pernia said the latest data were a “testament that our economy remains robust and is growing at a healthy and steady pace.”

Growth will likely meet the official 2017 target of 6.5 to 7.5 per cent and could accelerate in the medium term to 7 to 8 per cent, he said.

But risks include the country’s vulnerability to extreme weather such as drought and strong typhoons, possible policy shifts in the US and greater volatility in capital flows.

“The uncertain political situation at home and Donald Trump’s election in the US represent the major downside risks to the economy,” Gareth Leather of Capital Economics said in a commentary.