PH still one of Asia’s top economic performers

IMPROVEMENT in government spending and robust growth of the services sector pushed the economy to grow 5.6 percent in the second quarter, making the Philippines still one of Asia’s fastest growing economies despite the weakness of the global economy.

The Philippine Statistics Authority (PSA) reported that the second-quarter gross domestic product (GDP) was higher than previous quarter’s 5 percent but lower than the 6.7 percent during the same period last year.

“The second quarter GDP growth shows the expanse of the country’s resiliency from the prevailing weakness of the global economy. This growth is currently the third highest among Asia’s major economies, behind China and Vietnam,” said

Socioeconomic Planning Secretary Arsenio Balisacan. Balisacan credited the robust economic growth to significant improvement in government spending, especially public construction, in April to June.

“This is a result of government’s efforts to address issues on spending bottlenecks, especially for public infrastructure, which held back growth in the first quarter. This significant improvement gives us more confidence about the performance of the public sector in the coming quarters of the year,” he said.

Government data indicates that the second-quarter growth was driven by the services sector which grew 6.2 percent, and industry sector which increased 6.1 percent in the second quarter. These sectors contributed 3.5 percent and 2.1 percent, respectively, to GDP growth during the period.

Growth of the agriculture sector, however, declined 0.5 percent due to the impact of the El Nino. The second-quarter figure brought GDP growth to 5.3 percent in the first semester of 2015 from previous year’s 6.2 percent. Despite the robust second-quarter GDP, Balisacan admitted that achieving the 6 to 7-percent GDP growth target for the year is “quite a challenge.”

“Realistically, even the low-end (target) now is very much a challenge. The (inter-agency economic planning body) DBCC (Development Budget and Coordination Committee) technical working group is working on the numbers. And we will meet soon to decide on targets for the rest of the year. But it is very likely we will scale down the targets,” he said. He believes that a 6 to 6.5-percent average growth for the year is a “realistic” target given the ongoing events in the global economy that may affect the country.

Balisacan, also the National Economic and Development Authority (Neda) director general, said the economy needs to grow 6.6 percent for the second half of 2015 to achieve the 6-percent growth for the full year.

“Probably, we should be looking now the 6-percent level… 6.6 percent (growth) is very doable,” he said, adding this growth can be achieved despite the El Nino drought as the agriculture only comprises 10 percent of the economy.