PHL economy slows down in first quarter due to natural disasters

By DANESSA O. RIVERA, GMA News

Published May 29, 2014 10:06am

(Updated 1:58 p.m.) The economy expanded at a slower pace in the first quarter as the Philippines continued to reel from the lingering effects of the natural calamities that hit the country late last year.

The Philippine Statistics Authority (PSA) on Thursday reported that the gross domestic product (GDP) grew by 5.7 percent in January to March, compared with 7.7 percent a year earlier.

The National Economic and Development Authority (NEDA) noted In a separate statement that the country "continued to feel the lingering effects of the disasters that hit the country during the last quarter of 2013."

Secretary Arsenio M. Balisacan, Economic Planning secretary and NEDA director-general, was cited as saying, "Despite this, the Philippines is the third fastest growing among the major economies in Asia in this period, next only to China with 7.4 percent and Malaysia with 6.2 percent."

The first quarter GDP fell short of the government's 6.5 to 7.5 percent goal for the year, as well as the 6.4 percent median forecast in a GMA News Online poll of economists.

Output in the fourth quarter of 2013 was revised at 6.3 percent as Typhoon Yolanda curbed growth, but full-year GDP remained at 7.2 percent.

The strongest typhoon ever to hit land, Yolanda barreled through the Central Philippines and northern Palawan on Nov. 8, flattening urban centers and killing at least 6,200 people.

"The relatively slow growth is expected, given the magnitude of the destruction in production capacity," Balisacan said.

"In agriculture, permanent crops, notably coconuts, were felled. Damage to agricultural output also disrupted supply chains, which may partly explain why food manufacturing output also declined.

"The tourism and insurance industries likewise slowed down in the first quarter as they are still reeling from the impact of natural calamities last year," the NEDA chief added.

Prior to the super typhoon, a powerful earthquake had also caused serious damage in the province of Bohol, a major tourism destination in the central Visayas.

Services drive growth

The first quarter output was driven mainly by the services sector, which grew faster year-on-year, National Statistician Lisa Grace Bersales said.

"Among the three major economic sectors, services made the highest contribution to GDP growth – contributing 3.2 percentage points followed by industry with 1.8 percentage points, and agriculture at 0.1 percentage points," she said.

Services expanded by 6.8 percent in the first quarter from 6.5 a year earlier, PSA data showed.

Manufacturing grew by 12.3 percent in the period, slower than the 11.3 percent growth in the comparable period last year. Agriculture coughed up 0.9 percent from 3.2 percent last year.

Though the adverse effects of natural calamities to GDP were expected, first quarter growth could have been within government targets if not for those events, Balisacan said.

"The adverse effects are expected to diminish as the quarters go by. The effect in second quarter is much less," Balisacan noted.

The government maintained its 6.5 to 7.5 percent goal for the year, as reconstruction and rehabilitation will gain traction in the succeeding quarters, Balisacan said.

"The rehabilitation efforts are at various stages... We expect this will speed up in the coming months as soon as we get all plans firmed up," he said.

"The private sector will rebound in the next quarters. We are confident the 6.5 to 7.5 target for the full year is within reach," he said.

However, risks are in the offing, but mainly El Niño.

"That's why we're paying close attention to mitigating effects of El Niño which is expected to hit us in the third quarter," Balisacan said.

Palace says PHL still on track

But Presidential Communications Operations Office head Herminio Coloma Jr. said the Philippines remains "on track" to reach its full-year growth target of between 6.5 to 7.5 percent.

"[This is] as the government speeds up rehabilitation, construction, and recovery projects that will rebuild assets, restore supply change, and strengthen capacity building, especially for people and communities affected by typhoon ‘Yolanda’," he said.

In order to boost economic growth, he said the government will continue to implement the strategies in the updated Philippine Development Plan.

He said the Department of Labor and Employment will specifically focus on implementing job creation facilitation programs targeted at businesses that are expanding operations in order to further boost employment.

"Samakatuwid, pagtutuunan ng pansin ng pamahalaan ang pagpapalago ng pamumuhunan sa mga industriya at sektor na lilikha ng mas maraming pagkakataon sa paghahanapbuhay, at ang mga bagong trabahong ito ay sa mga sektor na mataas ang kalidad at mas mataas ang pagpapasahod," he said.

The Palace official said that the priority sectors in employment generation will be manufacturing, tourism, information technology, business process management, construction, logistics, and agribusiness.

"Government shall focus on increasing investments on these priority sectors that, according to NEDA, can provide remunerative jobs, thereby promoting inclusive growth, especially among our countrymen in the marginalized sectors," he said. – VS/YA/NB, GMA News

Tags: phleconomy, phlgdp, philippinestatisticsauthority