Category : Press Release
Date : May 18, 2017
Agency : National Economic and Development Authority
Title : Statement Socioeconomic Planning Secretary on the 2017 Q1 Performance of the Philippine Economy
Article :
STATEMENT
ERNESTO M. PERNIA
Socioeconomic Planning Secretary

Press Conference on the Performance of the Philippine Economy
for First Quarter 2017
May 18, 2017; 10:00 am
Astoria Plaza, Ortigas Center


Colleagues from NEDA and from the Philippine Statistics Authority,
First of all I would like to thank my colleagues from both NEDA and PSA who were able to do an efficient work. You know it’s not easy to come up with these numbers. We do it quarterly for GDP and monthly for many others and we have to work over time to able to come up with these numbers.
Partners in government,
Dear friends from the media,
Ladies and gentlemen,
Good morning.

The Philippines remains one of the strongest performers among the major emerging economies in Asia. It grew 6.4 percent, as already mentioned by our National Statistician, in the first quarter of 2017. 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.
Our first quarter performance bodes well for the economy as it is broadly in line with our target of 6.5-7.5 percent for this year. It is, however, lower than desiredly expected, and for this we were somewhat downcast because we were expecting something like around the midpoint of growth range 6.5-7.5 percent. 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.
[Sec. Pernia explains the slide presentation]
This can be shown by the slides there, the red bars are years with election spending. Whereas, the green post the year after the election year.
It’s quiet a slide downward after the election year. Next slide.
[Sec. Pernia explains the next slide]
You can also compare the performance of this year’s first quarter with the first quarter of 2011 and you can see that our performance in the first quarter of 2017 is a quiet, much superior to what happened in the first quarter of 2011. This was the first quarter of the year right after the 2010 election.
It’s also better compared with the first quarter of 2015 and it’s only inferior to last year’s first quarter, which was the year of election. Spending would have been quiet robust until election in May 2016. Next slide.
[Sec. Pernia explains the next slide]
This is the [slide] if we breakdown the economy by sectors: agriculture, industries, services on the supply side; and on the spending side: consumption, investment, government spending, and exports. Those are the composition of the GDP growth.
Also, the changing of the guards of the government and reorientation of programs really take time to settle, and this slowed government spending for the quarter. Note, however, that this was better than during the previous administration where government consumption spending and public construction contracted by about 15 percent and 37 percent, respectively. Of course, this could also mean that we have benefitted from reforms that have been put in place by the previous administration. This further demonstrates the strategy of the Duterte administration, which is to sustain good practices of previous administrations, and improve upon or correct those that require correction or improvement.

On the demand or expenditure side, the economy remains strong, even with the slowdown in household spending and capital formation. With improving global demand, growth in exports was robust. 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. On the supply side, agriculture made a great comeback with 4.9-percent growth rate 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.

Moving forward, the domestic economy is poised 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.

It is important to ensure 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.

But we remain on the lookout for external downside risks that may include market volatility from continuing US interest rate normalisation, 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 Nino phenomenon, which may include continuous production support, timely importation, and the distribution of seeds.

We also need 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% was pretty high compared with first quarter of last year.

Likewise, 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.

We are off to a steady start. We aim to gain a strong footing in the succeeding quarters as we move forward with plans and programs included in the Philippine Development Plan, which will be formally launched on June 2, 2017 at the SMX convention center. We are inviting all of you to join us in the event. We aim to follow through and we aim to be resolute to finish strong and well within our targets.

Thank you and have a good day to all!