The gross domestic product expanded 6.6 percent in the fourth quarter, bringing the full-year growth to 6.8 percent in 2016 and making it the second fastest growing economy in Asia, the government said Thursday.
Last year’s Philippine growth exceeded China’s 6.7 percent and was outpaced likely by India’s growth of more than 7 percent. India, which saw an expansion of 7.3 percent in the third quarter, has yet to report its official fourth-quarter GDP numbers.
“We are seeing a transformation to a stronger, more developed economy,” Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc. in Hong Kong, said, referring to the Philippines. “Recent administrations worked hard to ensure macroeconomic stability which serves as its anchor.”
Data from the Philippine Statistics Authority showed the 6.8-percent growth in 2016 was the fastest since the 7.1-percent expansion in 2013 and eclipsed the 5.9-percent growth in 2015. This was also within the government’s target of 6 percent to 7 percent for 2016.
“For the full year of 2016, we could be the second fastest, with China growing at 6.7 percent and Vietnam at 6.2 percent for the whole year,” Economic and Planning Secretary Ernesto Pernia said in news briefing.
The gross national income, which includes foreign exchange inflows, grew 6.1 percent in the fourth quarter and 6.6 percent in the whole of 2016.
The National Economic and Development Authority said the 6.6-percent expansion in the fourth quarter was supported by higher investment and consumption.
“Although this is lower than the 7 percent growth in the third quarter of 2016, this is higher than the 6.3 percent growth recorded during the fourth quarter of 2015. Let me note that the last quarter growth of an election year is usually slower than the first half due to the transition of government, and as investors adopt a ‘wait-and-see attitude,” Pernia said.
Economic growth in the fourth quarter, however, was behind China’s 6.8 percent and Vietnam’s 6.7 percent.
The government said public construction surged 23 percent in the fourth quarter while private consumption picked up 6.3 percent, on strong consumer confidence, modest inflation and interest rates, and improving labor market conditions.
Fourth-quarter growth was affected by the 1.1-percent contraction in the agriculture sector which suffered from the impact of typhoons. Services expanded 7.4 percent while the industry sector grew 7.6 percent in the quarter.
“Agricultural growth was a letdown as it returned to negative territory, reeling from the effects of typhoons ‘Karen’ and ‘Lawin’ during the fourth quarter of 2016,” Pernia said.
Pernia said the industry sector was expected to stay vibrant, with the construction industry expected to benefit from the government’s aggressive commitment to approve and implement critical infrastructure projects.
“The services sector is also expected to remain strong, supported by moderate inflation, expected influx in inbound tourists, expansion in retail trade, a healthy financial system, sustained growth of remittance, and the continuing growth of the IT-BPM [information technology-business process management] sector,” Pernia said.
He said domestic demand remained buoyant and should continue to provide support to economic growth in the near to medium-term.
Pernia said the government’s growth target of 6.5 percent to 7.5 percent in 2017 would likely be achieved.
“In the medium-term, we expect growth to strengthen further towards 7 percent to 8 percent. This would mean that, over the next six years, the economy will expand by about 50 percent in real terms, and per capita income will rise by over 40 percent,” Pernia said.
Bangko Sentral ng Pilipinas Governor Amado Tetangco said the government’s thrust on infrastructure spending should provide a solid base for the economy to meet its 2017 target.
“The inflation outlook also remains manageable. Thus there is no real pressing need to deviate from current stance of monetary policy. That said, we continue to monitor external developments that may affect our growth dynamics and financial markets. We will adjust policy levers as and when necessary,” Tetangco said.
The Philippine economy”•now about $292 billion”•could achieve upper middle-income country status with per capita income of at least $4,126 by 2020, the Asian Development Bank forecasts, joining the likes of China, Malaysia and Thailand. With Bloomberg