The Philippines’ gross domestic product (GDP) grew by 6.4% in the fourth quarter of 2019, bringing full-year growth to only 5.9%, the first sub-6% and slowest growth rate in eight years.
“(This is) the slowest in eight years and slightly below the low end of the 6% to 6.5% revised target of the government for the year,” Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) Director General Ernesto M. Pernia said in a press conference together with Philippine Statistics Authority (PSA) officials on January 23, 2020.
He said various challenges beset the economy in 2019, but the Philippines was still likely the second fastest growing economy in Asia next to Vietnam in the fourth quarter of 2019. The 6.4% fourth quarter outturn was below Vietnam’s 7% but higher than China’s 6%.
But to meet the government's revised target of 6% to 6.5%, the economy should have grown by at least 6.9% in the fourth quarter.
Among the challenges faced in 2019 were the El Niño phenomenon and the African Swine Fever outbreak in parts of Luzon that caused a slowdown in the agriculture sector, the budget impasse in the first quarter which led to delays in the implementation of government programs and projects, and the election ban on certain, mostly infrastructure, projects.
“We have seen our economy facing several challenges right at the start of 2019,” Pernia said.
The Philippines has been growing by more than 6% in the last eight years - 6.7% in 2012, 7.1% in 2013, 6.1% in 2014, 6.1% in 2015, 6.8% in 2016, 6.7% in 2017 and 6.2% in 2018.
In 2019, GDP growth was recorded at 5.6% in the first quarter and 5.5% in the second quarter. A day before the fourth quarter results were announced, the third quarter figure was revised downward to 6% from the previously announced 6.2%. With the fourth quarter GDP outturn increasing by 6.4%, full-year GDP growth was only 5.9%.
Related story: Government revises Q3 growth, seen to miss 2019 target
4th quarter results
In its report, the Philippine Statistics Authority said the main drivers of growth in the fourth quarter of 2019 were: trade and repair of motor vehicles, motorcycles, personal and household goods; manufacturing; and construction.
Among the major economic sectors, services posted the fastest growth in the fourth quarter of 2019 with 7.9 percent. Industry grew by 5.4 percent.
Agriculture, hunting, forestry and fishing registered a growth of 1.5 percent.
Net Primary Income (NPI) from the rest of the world and Gross National Income (GNI) had corresponding growths of 4.6 percent and 6.2 percent. On an annual basis, NPI grew by 3.5 percent, and GNI by 5.5 percent.
With the country’s projected population reaching 108.7 million in the fourth quarter of 2019, per capita GDP grew by 4.8 percent.
Meanwhile, per capita GNI and per capita Household Final Consumption Expenditure (HFCE) posted a growth of 4.5 percent and 3.9 percent, respectively.
Pernia, for his part, said growth on the demand side was driven by the ramping up of government spending after the budget delay in the first half of 2019.
Public construction significantly increased by 34% in Q4 2019, with the completion of projects of the DPWH payment for the acquisition of right-of-way, and construction of government buildings.
On the supply side, the 7.9 percent growth in the services sector was mainly driven by the acceleration of public administration and defense, trade, and other services.
This was, however, tempered by the slowdown in agriculture.
“In particular, there were production declines in corn, sugar and banana primarily because of delayed planting and harvesting due to the El Nino phenomenon during the first half of 2019,” Pernia said.
Livestock growth also moderated, following the strict implementation and monitoring of movements of live animals across provinces as local government authorities worked to avert the spread of the African Swine Fever.
On the upside, improved output was recorded for coconut and the fishing subsector as higher demand in some regions induced some ponds to resume operations. Good weather conditions also allowed better fish catch and more fishing trips.
For 2020, Pernia noted that the eruption of Taal Volcano has resulted in crop losses and infrastructure damage while the 2019 novel coronavirus (nCoV) could also impact the economy.
He was, however, thankful that Congress passed the 2020 national budget early, preventing another budget impasse that could further slow down the economy.
"We are thankful that our colleagues in Congress and the Department of Budget and Management ensured the timely passage of the 2020 General Appropriations Act and also approved the validity extension of the 2019 fiscal program - both of which are critical to our efforts to spur economic growth," he said.
But he pointed out the need to reconfigure budget and disbursement protocols that are more robust.
He also stressed the need to "significantly improve the absorptive capacity of government agencies" for faster implementation and completion of its key social programs and infrastructure projects.
"We need to swiftly address issues such as the difficulty in the acquisition of right-of-way, delays in procurement, restrictive auditing rules, and skills shortage," he said.
Pernia also cited the need to manage the country’s inflation to boost household consumption by proactively addressing potential supply shocks especially on key agricultural commodities.
He called for vigilance amid the developments in the international oil market due to the recent escalation of tensions in the Middle East. He said this could put upward pressure on domestic oil prices and other energy-related items. (Ventures Cebu)