Philippine economy expands 7.2% in 2013

MANILA, Philippines (UPDATED) -  Beating government expectations, the Philippine economy expanded by 6.5 percent in the fourth quarter of 2013, bringing last year's full gross domestic product (GDP) growth to 7.2 percent, the government announced on Thursday.

The 2013 GDP growth is higher than the 6.8-percent posted in 2012. The country's GDP grew by 3.7 percent in 2011 and 7.6 percent in 2010.

Socioeconomic Planning Secretary Arsenio Balisacan said the economy grew better than the government's official target of 6 to 7 percent for 2013, but added that it could have been higher had the country not been affected by various disasters.

"Indeed, growth could have been better, had we not been perturbed by various disasters that hit the country such as the Bohol earthquake, the Zamboanga siege and typhoon Yolanda," he said.

The Philippines remains as one of the best performing economies in the Asian region in the fourth quarter of 2013, second only to China, which grew by 7.7 percent, Balisacan said.

On the supply side, the services and industry sectors continued to be the drivers of economic growth, expanding by 7.1 percent and 9.5 percent in 2013, respectively.

"The services sector contributed 3.6 percentage points of the real GDP growth in the fourth quarter of 2013. This was followed by the industry sector with 2.8 percentage points and agriculture with 0.1 percentage point. Fourth-quarter growth on the supply side was mainly propelled by manufacturing, trade, finance and real estate," Balisacan said.

Meanwhile, on the demand side, growth was boosted by household consumption, which contributed 4.2 percentage points, and net exports, which contributed 1.6 percentage points.

Despite the better-than-expected growth, however, some sectors tamed overall growth for 2013, Balisacan said.

"Construction had the biggest setback in the fourth quarter. The subsector contracted by 0.8 percent due to stricter rules imposed on real estate lending in compliance with prudential regulations. The Board of Investments has also tightened mass housing incentives. The rule requiring developers to allot 20 percent of their total housing investment for low-cost mass housing units is now being closely monitored and enforced."

Government spending also slowed down by 5.2 percent, dipping from the 9.5 percent growth posted in the fourth quarter of 2012. The deceleration was due to lower disbursements in personnel services and maintenance and other operating expenditures. For the full year, however, government spending jumped by 8.6 percent.

Imports also slowed down by 1.9 percent during the last quarter of 2013 from the 8 percent posted in the same period in 2012.

Aside from slowdowns in certain sectors, the combined impact of typhoons and other disasters may have also reduced the full year real GDP growth by at least 0.1 percentage point, Balisacan said.

Looking forward, Balisacan said the agriculture and industry sectors are expected to be vibrant this year, as the government promotes linkages between the two sectors to increase value added as a key strategy identified in the Philippine Development Plan midterm update. Major infrastructure projects, especially in the transport sector are also expected to boost growth this year and beyond.

"...[W]e are optimistic that the Philippine economy will remain strong in 2014, especially that the outlook on the global economy is becoming more favorable and as the domestic economy remains robust," he said.