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IT was
too good a piece of news to keep quiet about, so that
President Arroyo, who was in Australia on a state visit,
eagerly preempted official government announcement to
boast that the Philippine economy was on a roll, having
posted its strongest quarterly growth in 17 years.
Economic
officials on Thursday said the country’s gross domestic
product (GDP) grew a hefty 6.9 percent during the first
three months, far above private and government
forecasts, as the local economy rode on a flurry of
positive factors including low inflation, a strong peso,
election spending, higher household spending and brisk
export revenues.
Mrs.
Arroyo revealed the growth figures in an earlier
interview with local media in Canberra.
President Arroyo said on Thursday that the strong first
quarter growth of the Philippine economy signals that
its 6.1-6.7 percent growth target for 2007 is
attainable.
In a
statement, Press Secretary Ignacio Bunye quoted the
President also saying that “this latest figure may
signal that we are knocking at the door of 7 percent
growth in the years ahead.”
She said
economic growth has accelerated from a growth band of 3
to 4 percent several years ago, to
5 to 6 percent during her second term because of prudent economic
reform policies that she will sustain for the rest of
her term.
“As head
of the Neda Board, the highest economic policymaking
body, I will promote policies to sustain the growth
surge. These include maintaining macroeconomic
stability, improving the investment climate, sustaining
agricultural modernization, and achieving peace and
order,” she said.
She said
that her administration will stick with the spending
program set by the Development Budget Coordinating
Committee (DBCC) for a balanced budget next year, and
will continue to work with Congress to pass important
economic bills.
The
President made an indirect plea to her political rivals
to set aside their differences and cooperate with the
administration in alleviating poverty.
The
level of growth was the strongest in over 17 years when
economic activities improved 7.4 percent during the
fourth quarter of 1989. GDP growth is commonly used as a
barometer for economic performance.
“The
government’s determined reforms to hike revenues, to
manage expenditures effectively, to contain the deficit
and to tame inflation are all cascading to benefit the
economy,” Socioeconomic Planning Secretary Romulo L.
Neri said in his statement.
“The
easing pressure on interest rates, the record levels of
overseas remittances and robust export earnings have all
resulted in improvements in the country’s outlook,” he
added.
The
agriculture, fishery and forestry sector grew 4.2
percent; industry at 5.3 percent and services at 9.1
percent—the latter growth being the highest since 1983,
prompting economic officials to describe it as the
linchpin in the economy.
Services
contributed 4.4 percentage points to overall GDP growth,
followed by industry with 1.7 percentage points and
agriculture fishery and forestry with 0.8 percentage
point.
Among
other production side indicators in the first quarter,
manufacturing gross value added slowed to 4.6 percent
from 5 percent during the same period last year;
construction went down to an 8.6-percent growth from
10.7 percent; trade up to 9.1 percent from 5.3 percent;
private services increased pace to 8.9 percent from 7.7
percent, and government services posted a 7.1-percent
growth from 3.7 percent.
“There
are some indications that some manufacturing
establishments are increasingly engaging in other
economic activities, particularly, trading,” Romulo A.
Virola, secretary-general of the National Statistical
Coordination Board, said of the sector’s continued major
contribution to industry despite a seeming slowdown.
On the
expenditure side, personal consumption expenditure
picked up to 5.9 percent from 5.3 percent; government
consumption to 13.1 percent from 7.6 percent; capital
formation nudged up 0.6 percent versus 0.3 percent
before and exports posted a 9.1-percent growth against a
faster 13-percent expansion during the first quarter
last year.
“We are
now at home with other Asian economies. . . It is time
for investors to come in,” commented Dennis Arroyo,
director for national planning and policy of the
National Economic and Development Authority (Neda).
The
Philippines’ first-quarter growth is third highest in
the region, next to China and Vietnam.
This
higher-than-expected performance may even prompt the
Development Budget Coordination Committee to review its
GDP growth target for the year, now pegged between 6.2
percent and 6.7 percent, and move for a higher band,
Mrs. Arroyo said.
“We are
now knocking at the door, so probably we will take a
second look at the 7-percent growth [target],” he added.
Former
Neda director general Cielito F. Habito, however, was
cautiously optimistic on the sustainability of such a
high growth rate given some bearish conditions and
sentiments.
“Definitely this is welcome news since the growth defied
expectations… but if we want to grow on a higher plane
we must look at the challenges, the drivers in
sustaining such levels of growth,” he said.
Habito
particularly noted the 2.5-percent contraction in
imports in the first quarter, which he said may not be
an optimistic signal since inward shipments largely
indicate future production intentions.
“This
actually tells us what to expect in the future,” he
commented.
Habito
likewise said business sentiment remains wobbly, in
spite of gains, and would remain so until there is a
satisfactory closure on some political issues,
especially the continuing questions on Mrs. Arroyo’s
legitimacy as president.
--With M. Gonzalez |
