The Philippine economy grew by 6.9 percent in the first quarter of the year, the countrys most impressive growth in nearly two decades. But sustaining this growth is easier said than done, analysts said, considering that much of it is due to election spending. The manufacturing sector actually slowed, production was stagnant, while the agricultural sector barely moved.
By Carlos H. Conde
davaotoday.com
MANILA The Philippine economy grew by 6.9 percent in the first quarter of the year, the countrys most impressive growth in nearly two decades that likewise surpassed forecasts and defied expectations, officials said Thursday.
But sustaining this growth is easier said than done, analysts said, considering that much of it is due to election spending. Ibon Foundation, an independent economic think tank, described the spending — estimated to be more than 50 billion pesos — as scandalous while another analyst said the growth may actually be a fluke because of this.
The increase in the countrys gross domestic product was much higher than the initial government forecast of between 5.3 percent and 6.1 percent, and higher than the 5.7 percent in the first quarter of last year, according to the National Statistical Coordination Board.
Officials said the growth, the highest since 1990, was mainly driven by the services sector, which expanded at 9.1 percent, as well as increased government spending, low inflation, a strong peso and robust exports.
The services sector, which accounts for more than half of domestic production, remains the pillar of the economy, said Romulo L. Neri, secretary of the National Economic Development Authority.
Trash Kids. Despite the government’s claim of economic growth, most Filipinos — like these children in Davao City who scavenged for food in the trash this week — are still reeling from poverty. (davaotoday.com photo by Barry Ohaylan)
Trade services posted the highest growth, with 9.1 percent compared to the 5.3 percent in first quarter last year. Transport services increased by 9.6 percent, up from 6.9 percent last year. Finance grew 13.4 percent, down from 14.6 percent last year.
The industry sector remained stable at 5.3 percent, Neri said during the presentation of the new data on Thursday, in which he made special mention of the growth in construction, 8.6 percent, and mining, 11.0 percent.
Surprise, surprise
We were stunned, said Luz Lorenzo, research head of ATR Kim Eng Securities in manila whose forecast was 5.8 percent. Where the surprise came from, she explained, was the strong showing of Philippine exports, which increased by 9.1 percent compared to 2.3 percent in the last quarter of 2006. Poor imports, which registered negative 2.5 percent, magnified the performance of exports.
News of the economys good showing came on the heels of strong performances by the peso and the stock market in recent weeks, with the latter posting record highs the past three weeks. On May 18, the index closed at 3,449.18 points, up from the old record of 3,447.6 points right before the 1997 Asian financial crisis. The index has been growing since.
On Thursday, the Philippine Stock Exchange composite index was up 76.12 points or 2.24 percent to 3,474.67 points while the peso, propped up mainly by inflows of remittances from Filipino workers abroad, exports and tourism receipts, reached 46.16 to the US dollar in early trade on Thursday. It closed 46.33 on Wednesday.
This is a great sign that we will meet our GDP growth target of 6.1 to 6.7 percent for 2007, President Gloria Macapagal-Arroyo said Thursday from Australia, where she was on a state visit. This latest figure may signal that we are knocking at the door of 7 percent growth in the years ahead. We need rapid growth to multiply jobs, to raise incomes, and to defeat poverty.
Arroyo also credited the country’s outsourcing industry for the growth in the services sector. Over the years, more and more call centers and medical-transcription companies have opened in the Philippines, taking advantage of the Filipinos’ good command of the English language.
2007 Elections
