The economy sprang a pleasant surprise in the third quarter, insofar as private economists were concerned. Many of them had expected economic growth of 6.5 percent or lower, but the official figures turned in a 6.9-percent expansion in the gross domestic product (GDP) from July to September.
The Duterte administration’s chief economist even called it “spectacular” as it exceeded expectations and economic expansion historically slowed in the year after a national election, although something higher would have justified such a description.
But from all indications, the growth was respectable. The Philippines’ GDP expansion during the third quarter was outpaced only by Vietnam’s 7.5 percent and was faster than China’s 6.8 percent and Indonesia’s 5.1 percent.
Also, the third-quarter figure was higher than the second quarter’s 6.7 percent and the first quarter’s 6.4 percent, although lower than the 7.1-percent expansion in the third quarter of 2016.
Financial markets cheered the higher-than-expected growth, with the peso strengthening and returning to the 50:$1 level last Thursday, closing at 50.90 from 51.04 last Wednesday.
At the end of the first nine months, the economy grew by 6.7 percent, making Socioeconomic Planning Secretary Ernesto Pernia optimistic that the Philippines is “on track” to achieve the growth target of 6.5-7.5 percent for 2017.
(Inquirer columnist Solita Collas-Monsod says that the actual growth target is 7-8 percent under the existing medium-term development plan.)
According to Philippine Statistics Authority data, the third-quarter GDP growth was the fastest in four quarters. On a per-sector basis, services (banking, retail, tourism are examples) contributed 4.2 percentage points to the GDP expansion; industry (mainly manufacturing and mining), 2.5 percentage points; and agriculture, 0.2 percentage point.
The outlook for the fourth quarter is bright as well. Traditionally, household consumption picks up in the last three months of the year due to heavy spending associated with the Christmas season.
So expect all those beneficiaries of the more than 10 million Filipinos living and working abroad and the more than a million workers in the burgeoning BPO sector to fuel much of the growth in the last quarter.
To be sure, there is still much to be done to make economic growth felt by the marginalized sectors — particularly those living in the rural areas, specifically the farmers and fishers.
The relocation of industries away from the National Capital Region should be more vigorously pursued. The recent movement and developments in Clark — the international airport project and the “green city” that will house a number of government agencies in the future — just north of the capital are a good example.
The government should specifically develop regional airports and build more roads, bridges and railways in the countryside to bring investors out of Metro Manila. New investments in the provinces mean new jobs and, in turn, prosperity for those places.
This is where the government needs to do its part: Spend what it has programmed to spend.
Latest data from the Department of Budget and Management showed that while the national government’s expenditures from July to September rose 7 percent year-on-year to P683.7 billion, this was short by 14.7 percent of the P801.1-billion programmed for the quarter.
People can find many things to say about the Philippines’ third-quarter economic performance: It is below the official target; it could have been higher were it not for corruption; it excluded the marginalized sectors, etc.
But at the end of the day, an economy growing by 6.9 percent in a quarter or 6.7 percent in the first nine months is respectable from any angle.
Yes, there is more that the government should do to make it inclusive. But the private-sector capitalists also have a role in making economic growth inclusive.
Aggressively expanding in the countryside by tempering their profit motive and absorbing some risk would be a good start.
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