Philippine economy grew at slower pace of 6.7% in 2017

January 23, 2018

The Philippine economy grew at a slower pace in 2017, registering a full-year growth of 6.7 percent, according to government data released on Tuesday.

For 2016, gross domestic product expanded 6.9 percent. The inter-agency Development Budget Coordinating  Council targeted GDP growth rate of 6.5 to 7.5 percent last year.

For the fourth quarter of 2017, growth reached 6.6 percent, similar to the same period in 2016, but lower than the 7 percent in the third quarter of 2017.

During the last quarter, industry grew 7.3 percent; services, 6.8 percent, and agriculture 2.4 percent.

Socioeconomic Planning Secretary Ernesto Pernia, in a press conference, indicated that lower growth rate in 2017 was the trend in a post-election year.

"Before you give a sigh of disappointment, let me give you some more comparisons with recent election and post-election years in our recent economic history," he said.

He noted that in 2005, a post-election year, the GDP was 4.8 percent from 6.7 percent in 2004; and in 2011, it was 3.7 percent from 7.6 percent a year ago.

"And you can see that our decline is really very moderate at 0.2 percent of 1 percentage point.  To me, this is a good performance, given the fact that it is already normal for post-election years to witness a decline in economic growth," he said.

Pernia said GDP growth last year was still a "strong finish" that kept the Philippines' position as one of the fastest-growing economics in Asia after China's 6.9 percent and Vietnam's 6.8 percent.

For the fourth quarter, Pernia said the main driver of growth was public spending at 14.3 percent from 4.5 percent a year ago.

He also cited that growth in exports of goods bounced back to 20.2 percent in the fourth quarter from 17.2 percent in the third quarter, offsetting the services exports sector's slowdown of 12.6 percent from 19.9 percent in the previous quarter.

He attributed the decline in the services exports, particularly from the business process outsourcing, "as an indication that the current market profile of the BPO sector is ripe to move into higher value added services."

National Economic and Development Authority (NEDA) Undersecretary for Planning and Policy Rosemarie Edillon said the growth in the BPO sector was usually "very, very high."

Up to now, its growth was still high, she said, but added apparently it reached its peak, thus, the need to "diversify into higher value added."

"We have introduced some reforms especially with respect to higher level skills development...not the voice part of the BPO," she said.

As to the effect of the newly-passed tax reform measure, Pernia downplayed the long-term effect on the prices of oil and basic commodities.

He said there could be "a kick in few months" on inflation during the transitory period.  "(But) it will taper off later on," he said.

President Rodrigo Duterte signed last December into law the Tax Reform for Acceleration and Inclusion (TRAIN) Act, increasing the value added tax for certain products and services.

As to the effect on inflation due to the movement of prices of oil in the world market, he said this is harder to predict.

"But I don't think it will really be that significant. It will not be abrupt," he added.

Pernia, also director general of NEDA, said for this year, the government would have strong determination to accelerate growth to hit the target range of 7.0 to 8.0 percent.

He said Build, Build, Build program would continue the momentum  in providing more opportunities to the country such as investments, job creation, connectivity, and dependable delivery of public services.

"Certainly, the Philippine economy remains strong and there is still more room to grow. The government remains committed to making this growth inclusive," he said. Celerina Monte/DMS