MANILA, Philippines (UPDATED) - The Philippines grew 6.6% in 2012, exceeding forecasts and making it among Asia's best performing economies.
The economy's performance was well above the expansion of 3.9% in 2011 and surpassed the government's own target of 5% to 6% for 2012.
"In hindsight, it appears the target was low," noted Socioeconomic Planning Secretary Arsenio M. Balisacan at the press briefing on Thursday, January 31.
The economy grew 6.8% GDP in the 4th quarter, when consumer spending was up 6.9%, according to the National Statistical Coordination Board (NSCB). This is higher than Vietnam's 5.4% and Singapore's 1.1%, but not China's 7.8%.
NSCB Secretary general Jose Albert said the strong end to the year was fuelled by the services, business real estate and manufacturing sectors, reflecting broad-based growth.
The Philippine economy has been one of the strongest in Asia amid a general sense of optimism that can largely be attributed to President Benigno Aquino's drive to fight corruption.
"More than anything, we should really thank the private sector and the general public for trusting us and increasing their stake in the economy," Balisacan told reporters.
Household consumption remained the biggest growth driver of the economy, contributing the bulk, or 4.3 percentage points, to the annual performance. This was largely supported by remittances sent by millions of Filipinos working abroad (OFW) and complemented by low inflation.
Inflation averaged only 3.2% in 2012, within the relatively low target of 3% to 5% set by the Bangko Sentral ng Pilipinas (BSP) throughout the President's term.
The low inflation environment somehow made up for the 6% appreciation of the peso as OFW remittances and earnings of Business Process Outsourcing (BPO) firms ensured the steady inflow of dollars into the system.
"We continue to note that strong peso affects BPO, exports, families of overseas Filipinos," the Socioeconomic Planning chief said.
OFW remittances sent an average of $21.59 billion in the January to November period, up 6.1% year on year. BPOs, meanwhile, was expected to generate at least $220 billion in revenues globally in 2012 according to a report by the Everest Group.
Overall, services kept the economy afloat, accounting for 4.2% of the annual performance. The sector "defied expectations", Balisacan said. Buoyed by robust trade and communication servives, the sector grew 7.4% in 2012 and 6.9% in Q4.
Industry, on the other hand, contributed 2.1% to the full-year growth, while agriculture accounted only for 0.3%.
Public construction rebounded with a growth of 32.4% in 2012. Private construction posted a growth of 8.6%.
Exports, one of the major legs of Philippine growth, was a laggard in 2012 due to the global economic slowdown and strong peso.
"The economy could have grown 7% to 8% in 2012, if not for the global economic slowdown," Balisacan noted.
The government targets 2013 growth to range between 6% and 7%. - with reports from Cai Ordinario/Rappler.com