THE Philippine economy grew by 6.4 percent in the first quarter of 2017 making the country one of the fastest in Asia.
"For the first quarter, we overtook Vietnam and Indonesia which grew by only 5.1 percent and Thailand by only 3.3 percent. We are only second to China’s growth of 6.9 percent while India’s number hasn’t come out yet," said Ernestor Pernia, socioeconomic planning secretary, during Thursday's press conference on the Performance of the Philippine Economy for first quarter 2017 at Astoria Plaza, Ortigas Center, Metro Manila.
However, the performance of the economy for the first quarter of 2017 is below the 6.5 to 7.5 percent target for 2017.
"It is, however, lower than expected, and for this we were somewhat downcast because we were expecting something like around the midpoint of growth range 6.5 to 7.5 percent," Pernia said.
"But this can be explained by the base effects: that is, growth last year was high due to election spending, as you would already know by now, the impact of which has already dissipated," he added.
Based on the National Economic and Development's presentation, there is a downward trend in terms of gross domestic product (GDP) growth during the post-election period. In the first quarter of 2010, the economy grew by 8.4 percent but then went down to 4.6 percent in the same period the following year. In the first quarter of 2013, the GDP was at 7.6 percent then went down to 5.6 percent in the same period the following year.
"It’s quite a slide downward after the election year," Pernia said.
Pernia also reported that exports in goods and services experienced a robust growth.
"Exports of goods grew by 22.3 percent, the fastest since the third quarter of 2010, and exports of services grew steadily by 14.3 percent in the first quarter of the year," he said.
Pernia said to sustain the growth momentum of exports, it is important to ease government regulation, strengthen market intelligence gathering with the help of the private sector, and maximize trade agreements and economic groupings, especially with our Asean neighbors.
Meanwhile, Pernia said agriculture grew by 4.9 percent after several quarters of negative growth or decline, contraction of the agriculture sector.
"The services sector continued to be the main driver of growth as it grew by 6.8 percent. The 6.1-percent growth in industry also remained respectable with the boost in manufacturing, although tempered by the slowdown in construction and utilities, and decline in mining and quarrying production," he said.
Pernia said they see the domestic economy to maintain its growth momentum with the recovery of external trade and private sector’s steadfast optimism.
"The government has also been busy laying down a strong foundation for sustainable and equitable growth with an ambitious infrastructure program, among the many reforms and programs contained in the Philippine Development Plan 2017-2022—[among which] are infrastructure spending and as well as other government programs, including investment in human capital," he said.
Pernia also pointed out the importance in ensuring that government spending for both consumption and investment remains within the fiscal program, which is critical to sustain the growth momentum.
"With the steady unfolding of the Build Build Build program in the coming months, we expect construction activities and public spending to pick up sharply, consistent with the government’s aim to spend 5.3 percent of GDP this year for infrastructure and up to 7.4 percent by 2022," Pernia said.
He said they remain on the lookout for external downside risks that may include market volatility from continuing US interest rate normalization, geopolitical tensions in various regions, and the possible rise of protectionist sentiments in Western countries.
"We also have to remain cautious and stand ready to take measures to counter the effects of El Niño phenomenon, which may include continuous production support, timely importation, and the distribution of seeds," he said.
Pernia said there is also a need for them to ensure that inflation will remain modest for the next three quarters to keep demand strong.
"Our inflation in the first quarter at 3.2 percent was pretty high compared with first quarter of last year," he said.