2015 Fourth Quarter and Full-Year Performance of the Philippine Economy

STATEMENT

ARSENIO M. BALISACAN
Economic Planning Secretary and NEDA Director-General

Press Conference on the 2015 Fourth Quarter and Full-Year Performance of the Philippine Economy
Destiny Function Room, Elements at Eton Centris Bldg., EDSA, Quezon City
28 January 2016, 10:00 AM

Ladies and gentlemen, members of the media, my colleagues in government, good morning.

The 6.3-percent growth in the last quarter of 2015 affirms that the economy is indeed steadily traversing the higher growth path, building on the solid efforts by both public and private sectors. For 2015, among the major developing countries, the Philippines will likely be among the fastest in Asia, next to India, the People’s Republic of China, and Vietnam.

The acceleration of growth from the first quarter to fourth quarter has been very encouraging, bringing the average full-year growth to 5.8 percent. Though this is lower than what we targeted for the year, this growth is respectable given the difficult external environment, the onset of El Nino, and the challenges in government spending in the first semester.

This also gives the country a six-year average real GDP growth of 6.2 percent, the highest since the late 70s. Let me highlight the fact that, one, this consistent growth under the current administration has not been seen in the past four decades and, two, the growth has not been due to unsustainable borrowing as in the 1970s nor by short-lived portfolio capital. Rather, we see investments in areas that create jobs, increase incomes, and improve people’s wellbeing.

Compared to the previous years, I am pleased to note that the 2015 growth was driven by a much stronger domestic demand. Government spending accelerated to 9.4 percent compared to last year’s 1.7 percent. Growth in public and private investments also more than doubled to 13.6 percent from last year’s 5.4 percent. This was primarily led by public construction, which grew by 20.6 percent from 6.3 percent in 2014. As these investments get translated into increased employment and incomes, and with record-low inflation, household consumption also grew by 6.2 percent.

This growth in investment and consumption reflects optimism in the economy given the success of governance and economic reforms, which gave us ample space to overcome challenges such as weather-related disasters, global economic slowdown, as well as domestic uncertainties, especially those associated with the forthcoming elections.

While exports growth has been lackluster at 5.5 percent compared to last year’s 11.3 percent, exports in services have been very strong given the BPO sector’s robust performance. There is still a lot of room for expansion in the BPO sector towards higher value-added services—and this will require a more diversified set of skills and services and can stimulate economic activities in more sectors.

On the supply side, growth remained driven by the services sector, where growth accelerated to 6.7 percent in 2015 from 5.9 percent in 2014. This is followed by industry which grew by 6.0 percent. Agriculture, on the other hand, remains a challenge with its 0.2 percent growth.

With sound fundamentals and ongoing structural changes in the economy that make it more resilient to shocks, we can expect higher growth for 2016 as the global economy also picks up.

Nonetheless, there are remaining challenges that the next administration will continue to confront. Given serious threats from climate change and the realities of a global economy, we cannot afford to be complacent.

The biggest lesson we have learned over the past six years is that we need to build resiliency in each sector of the economy and the socioeconomic resiliency of each individual and community.  Each sector has to be diversified in terms of products and markets:

  • The agriculture sector, in particular, is vulnerable to weather shocks which, of late, has been more frequent and rather extreme (from El Nino to Yolanda, floods, etc.).
  • The industry sector, on the other hand, is much affected by external demand, which has been weak in all of the past six years. For both sectors, innovation and diversification are the critical strategies.
  • The services sector, on the other hand, has demonstrated that it can reach greater heights as more opportunities open for trade in services. We need to ensure that the policy environment is one that allows easier entry for firms and encourages innovation.

Needless to say, the capacity of the economy has to expand to support higher growth.  This would be by way of infrastructure development, efficient transport and logistics system, and competent, yet malleable, human capital.

Equally important is the need to build the socioeconomic resiliency of individuals and communities. And there can be multiple strategies like risk mitigation measures, disaster-preparedness, social protection, social insurance and programs that encourage volunteerism, inter-LGU interaction and community building.  At the same time, we need to be active participants in international trade and cooperation as these present an important source of support during critical times.

Ultimately, we would want to provide more opportunities for higher-value jobs for Filipinos. If we want to reach the highest potential of our economy, we should be keen in fortifying our economic achievements, and strengthening and institutionalizing the reforms this administration laid out for the years ahead.

Furthermore, if we let the numbers for the past six years speak for themselves, the agriculture sector persists to be the biggest roadblock in our goal of attaining a higher and more inclusive growth – both in the light of improving crop production and farmers’ incomes. There is an urgent need to rethink the development strategy for this sector, especially with the impact of El Niño and natural disasters that hound the country yearly.

Looking ahead, we are hopeful that the next leaders of this country will sustain the programs and reforms that have gathered significant gains over the years.  We have seen that investor confidence reached a high level as soon as the current administration’s platform of good governance moved forward and gained credibility. Now, in the coming elections, the challenge is for the Filipino voters to choose the right leaders who have the integrity and the ability to build strong institutions—credible institutions that can take the economy to an even higher level and significantly uplift the quality of life of the Filipino people.

Lastly, before I embark on another journey as a public servant, I would like to thank the members of the media present here today who have tirelessly covered press conferences of the National Income Accounts over the years that I have been in charge of explaining the economy’s performance. We could not have widely put forward our analysis, policy recommendations, and urgent call for reforms to the general public without your help. For the last time in this capacity, Salamat at Mabuhay Tayong Lahat.

Source: http://www.neda.gov.ph/2016/01/28/statement-of-secretary-balisacan-on-the-2015-fourth-quarter-and-full-year-performance-of-the-philippine-economy/