Gov’t: PH growth likely bounced back to 7% in Q2

MANILA, Philippines – The country’s chief economist said that the Philippines’ economic growth rate in the second quarter could have bounced back to 7%, fueled by the manufacturing sector.

Finance undersecretary and chief economist Gil Beltran said Monday, August 18, that the rise in factory output from 4.3% in the first quarter to 13% in the second quarter likely pulled growth back to 7% in the second quarter.

“Compared to the first quarter, production output in the second quarter grew almost thrice the first quarter level while sales increased 1.5 times the first quarter growth,” Beltran said.

“This means that the sector continued to draw down from inventory as in the first quarter. Replenishment of supply is necessary soon to avoid price increases,” he added.

The Department of Trade and Industry (DTI) may need to encourage investments in the sector to forestall inflationary impact as inventories drop below manageable levels, Beltran said.

In the first quarter of the year, the Philippine economy grew at a slower pace of 5.7% as the growth in the agriculture and industry sectors eased due to the lingering effects of Typhoon Yolanda (Haiyan).

Manufacturing key economic driver

“Manufacturing accounts for 23% of the economy, implying that the sector added incremental 1.4 to 2 percentage points to real Gross Domestic Product (GDP) growth in the second quarter,” Beltran said.

Manufacturing output in June grew by 13.3%, slightly lower than the revised growth in May of 13.4%.

The growth in output for the first half was also lower than growth posted during the same period last year.

“Producer Price Index (PPI) further slowed down to -2.9% in June 2014. This implies that the sector continues to cut costs thus, further enhancing its competitiveness,” Beltran said.

The chief economist mentioned that the manufacturing growth for June was broad-based, with 14 out of the 20 sub-sectors posted a positive growth.

Growth was led by printing (153.8%), followed by leather products (4.5%), and fabricated metal products (39.8%).

The biggest sub-sector, food manufactures, was able to sustain its growth for two consecutive months posting a 13.1% year-on-year growth for June.

For the first half, the following posted a significant increase in production: printing (135.4%), furniture and fixtures (67%), machinery excluding electrical (52.2%), and fabricated metal products (50%).

Full-year growth

The Philippine economy is projected to expand by 6.7% this year, with growth to be driven by private consumption and investment, the United Nations Economic and Social Commission for Asia and the Pacific’s (UN ESCAP) said. The UN ESCAP forecast is at the lower end of the government’s 2014 target of 6.5% to 7.5%.

The World Bank however downgraded its growth forecasts for the Philippines for 2014 and 2015, given the slow start of the economy in the first quarter and weak government spending.

In the Philippine Economic Update August 7, the Washington-based lender said that it revised its growth outlook for the Philippines to 6.4% from 6.6% for 2014, and to 6.7% from 6.9% next year.

The World Bank’s forecasts are below the government’s growth targets for 2014 and 2015 (7% to 8%).

On the other hand, Manila-based lender Asian Development Bank said in April that the country’s economy would likely grow below government targets this year and the next, tempered by higher inflation and interest rates.

ADB projected that Philippine growth would slow down to 6.4% in 2014 and 6.7% in 2015 from 7.2% in 2013. The forecasts are also below the government’s targets.

Inclusive growth

Meanwhile, the National Economic and Development Authority (NEDA) again emphasized the role of regional economies.

In particular, Economic Planning Secretary and NEDA Director-General Arsenio Balisacan emphasized the importance of the regional and local governments working with the private sector to make growth as inclusive as possible.

Citing such, the Philippine Statistics Authority’s latest Gross Regional Domestic Product (GRDP) figures revealed that 7 of the 17 regions in the country posted accelerated growth in 2013.

The typhoon-battered Bicol region recorded the fastest growth with 9.4%, surpassing its 6.9% growth in 2012, while the National Capital Region (NCR) registered only second with 9.1%.

Bicol and NCR were followed by South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos City. (collectively SOCCSKSARGEN region), 8.4%; Agusan del Norte, Agusan del Sur, Surigao del Norte, Surigao del Sur and Dinagat Islands, Butuan City, Cabadbaran, Surigao, Tandag, Bislig and Bayugan (collectively Caraga region), 7.8%; and the Ilocos region, 7.7%.

The economy of Eastern Visayas rebounded from a 6.4% contraction in 2012 to a 5.7% growth in 2013. – Rappler.com