MANILA, Philippines – It seems a long time coming but it looks like the industry sector is stepping up and taking charge of a bigger chunk of the economy.
The National Income Accounts data released by the National Statistical Coordination Board (NSCB) on January 31 showed that this is the second consecutive quarter when Industry grew faster than Services.
In the 3rd quarter, Industry grew by 7.6%, faster than the 7.5% posted by Services. In the 4th quarter, Services was again eclipsed by Industry. Services only posted a growth of 6.9%, slower than the 7.5% posted by the sector.
Growth in the 4th quarter for Industry in 2012 was a two-year high. In the 4th quarter, the NSCB said The biggest contributors to the growth of Industry were Manufacturing with 4 percentage points and Construction with 2.9 percentage points.
“This was led by the expansion in public and private construction activities and the electricity, gas and water sector. In the first two quarters of 2012, it was public construction that took up the slack but the private sector has taken over beginning the third quarter,” Socioeconomic Planning Secretary Arsenio M. Balisacan said.
“This is what we mean by the private sector upping its stakes in the economy. No doubt this was in support of the increased economic activity in 2012,” he added.
This track in the country’s growth is something that the government is gunning for. This was also part of the recommendations of Asian Development Bank (ADB) Philippines Country Economist Norio Usui who said the country cannot achieve high, sustainable economic growth without having a strong industry sector.
Poverty and jobs
The ADB said the Philippines’ reliance on the business process outsourcing (BPO) industry, as well as remittances-driven private consumption, do not provide higher paying jobs needed to reduce poverty.
The industry sector is composed of Manufacturing, Construction, Mining and Quarrying, and Electricity, Gas and Water Supply. This sector, apart from Agriculture, is a labor intensive industry that could boost employment, especially in generating quality jobs.
Balisacan said the country needs to increase employment opportunities for unskilled and low-skilled workers, which comprise much of the labor force.
Data from the National Statistics Office (NSO) showed that the country’s underemployment rate, on the other hand, dropped to 19% in October 2012, after registering a high of 22.7% in July 2012. The October figures was almost the same as what was seen in the same month last year.
“Majority (56.2%) of the total underemployed persons were visibly underemployed or working for less than 40 hours during the reference week. Those working for 40 hours or more accounted for 42.2%. Less than one-half (44.3%) of the underemployed were working in the agriculture sector and around two-fifth (40.5%) were working in the services sector. The underemployed in the industry sector accounted for 15.2%,” the NSO said.
Employers Confederation of the Philippines President Edgardo Lacson stressed the need for inclusive growth.
“The growth remains consumption driven and not investment led. The bigger challenge is how to sustain this remarkable performance and make it inclusive. It is a jobless growth,” he told reporters when asked to comment about the country’s economic performance.
Diversified sources of growth
However, world renowned economist Nouriel Roubini stressed at a recent Philippine Investment Summit 2013 the importance of diversifying sources of economic growth.
“I would like to emphasize the importance of diversification of sources of growth. Whether manufacturing, mining or services, make sure you improve productivity and efficiency and that you have comparative advantage in these businesses,” he said.
He also noted that services — just like manufactured goods — are now dollar-earners, too.
“China have advantage in the manufacture and exports of goods. But countries like India and Philipines have had great success in becoming very efficient in production of services, like BPOs, whether call centers or software, or other tradable services.
“One of the changes overtime is that services, which used to be non-tradeable goods, are tradeable now because of information revolution. Increasingly, the distinction may be less important. As per capita increases over time, the share of economy sourced from services tend to rise and manufacturing tends to shrink,” he said.
How the Philippines will pursue both sources of growth will be crucial in sustaining the country’s momentum. – Rappler.com
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