by Prime Sarmiento
MANILA, Jan. 31 (Xinhua) -- The Philippine economy posted a 6.6 percent growth in 2012, surpassing the government's and analysts' forecast and affirming the country is on its way to sustainable growth.
The Philippine government reported Thursday gross domestic product (GDP) expanded 6.8 percent on year in the fourth quarter, capping a strong year for an economy that posted record-breaking growth in the last three quarters.
Data released by the National Statistical Coordination Board revealed the key factors that boosted Philippine growth in 2012: increased public and consumer spending, recovery in the country's exports and robust growth in the services sector.
"The impressive growth was mainly attributed to the solid performance of all of the economic sectors," Pauline May Ann E. Revillas, research analyst at Metropolitan Bank and Trust Co., said in her report.
Revillas said this indicates the Philippine economy is "on the road to a higher growth trajectory, surprising markets with remarkable expansions in 2012."
Euben Paracuelles, Singapore-based economist at Nomura Holdings Inc., notes that the GDP report "was in line with what I was looking for. I think it shows that the improvement in the quality of growth drivers has come a long way."
The actual GDP results surprised even the country's economic managers, as it surpassed both official and multilateral agencies' forecast.
The Asian Development Bank (ADB), World Bank and the International Monetary Fund (IMF) have previously upgraded their forecasts for the Philippines, following a strong GDP growth in the first nine months of the year. But even that is lower than the actual growth rate. The ADB put 2012 GDP growth at 5.5 percent, IMF at 6.5 percent and the World Bank at 6.0 percent.
"At the close of 2011, we in the Development Budget Coordination Committee or DBCC set the target growth of GDP at five to six percent and then proceeded to design a fiscal program that would support this growth. On hindsight, it now appears that the five to six percent target was a bit low although at the time, this seemed like a fighting target," Socio-economic Planning Secretary Arsenio Balisacan said.
Balisacan said private consumption remained the largest contributor to the country's growth in 2012, rising by 6.1 percent on year. Low and stable inflation, steady inflows of overseas Filipinos' remittances and conditional cash transfers extended by the government boosted consumer spending.
Higher export receipts likewise supported growth, with the export sector growing 8.7 percent in 2012.
Balisacan said the services sector also defied expectations growing by 7.4 percent mainly contributed by trade, transport and communication, real estate, renting and business activities, and other services. Transport and communication accelerated by 9.1 percent, while the real estate sector rose 7.9 percent.
"We had expected a slower growth for the real estate, renting and business activities, which includes the outsourcing industry, owing to the continued slowdown in the global economy, And yet the sector still managed to grow faster than expected at close to 8 percent," Balisacan said.
Budget Secretary Florencio Abad also cited the 11.8 percent growth in public spending, noting that "despite external uncertainties and a tepid global market, local demand continues to be supported by high public spending, especially for the government's banner social services programs."
Balisacan said that despite the country's strong performance in 2012, Philippine economic managers won't be complacent.
"It is our immediate task to put in place policies and implement programs that will sustain our economy's growth over the medium term. We shall continue planting the seeds of a structural transformation in our economy to make it more investment and industry-led," he said, adding that attracting more investments will create more jobs and improve quality of life for most Filipinos.