In a press briefing, Socioeconomic Planning Secretary Arsenio Balisacan said aided by a strong second quarter, the Philippine economy remained among the fastest-growing in Asia, outperforming most of its neighbors.
He reported that the domestic economy accelerated in the second quarter to 5.9 percent – well above the average market forecast of 5.3 percent – from a moderate 3.6 percent recorded the previous year, boosting the first semester growth to 6.1 percent from 4.2 percent.
He said the second quarter performance validates the strong 6.3 percent growth recorded in the first quarter. The firm domestic demand and an improving export sector is expected to stimulate the economy’s production sectors, particularly agriculture and industry, in the next two quarters, he added.
“The brighter economic outlook supported by increased business confidence, strong employment creation, and accelerated government spending all contributed to the continued resurgence in economic activities,” he said.
Balisacan pointed out that the strong growth was in large part due to the “accelerated public investment, as well as a recovery in capital formation.”
He noted that government spending on public construction, which was a main culprit in the growth slowdown last year, grew by 45.7 percent in the second quarter, while capital formation grew 2.3 percent, a turnaround from a decline of 10.5 percent in the same period last year.
“The capital formation figures strongly suggest that investments, which had been negative in previous quarters, has bottomed out, and that growth in capital formation is resuming,” he added.
Balisacan also stressed that growth for the quarter was buoyed by government’s conditional cash transfer (CCT) spending which supported consumption, low inflation which kept household consumption stable, better exports performance, continued credit expansion, buoyant tourism sector, sustained overseas Filipino remittances, increased business and consumer confidence, and an overall positive domestic outlook.
Within the ASEAN, the Philippine economic growth performance was above the preliminary average growth (4.7 percent) of the region, growing faster than Malaysia (5.4 percent), Thailand (4.2 percent), Vietnam (4.4 percent), Singapore (two percent), but lower than Indonesia (6.4 percent). All of these, however, was overshadowed by China’s robust GDP growth (7.8 percent).
Balisacan, who is also director general of the National Economic and Development Authority (NEDA), said with the 6.1 percent first semester growth and inflation kept close to the lower bound of the Bangko Sentral ng Pilipinas’ target of three to five percent, “we maintain our view that the full-year 2012 real GDP growth rate projection of five to six percent; perhaps the higher end of the target is well within reach.”
In Malacanang, the government vowed to continue accelerating spending and improve other sectors to further boost economic growth amid global uncertainties.
“We continue to diversify our exports to different countries. But we know that, in the case of Europe, there are certain things that could happen that might make things difficult,” Presidential Communications Development and Strategic Planning Office Secretary Ricky Carandang said.
Balisacan said the government remains vigilant about risks to growth, citing further weakness of a struggling global economic recovery to remain a strong challenge in the near-term, particularly with the slowdown of China reining in on global growth.
“In the light of these prevailing global economic conditions, risks to the external trade of the country have increased, although these could be cushioned partly by the increased diversification of our exports. Worth noting is the strong performance of agricultural exports and other intermediate goods exports. The intensification of the euro zone problem and the geopolitical uncertainty are also external risks which can cause spikes in the world price of oil,” he said.
He cited another downside risk is the El Niño phenomenon, which, according to experts, will commence on the third quarter of the current year until the first quarter of 2013.
“Notwithstanding these challenges, the government stands ready to support growth. For one, our economy remains cushioned and resilient with sound macroeconomic fundamentals. In addition, government will continue to accelerate spending particularly on critical infrastructure projects,” Balisacan pointed out. - – With Aurea Calica
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