RP’s economy grew 5.4 percent

PHILIPPINE NEWS SERVICE — THE economy as measured by the gross domestic product grew by 5.4 percent last year amid booming services, but the expansion would have been faster had the peso not been too strong, the government said yesterday.

President Gloria Macapagal Arroyo said the growth was a concrete sign that the Philippines was poised to do more business and attract more foreign investors.

“I’m once again in the proud position to announce our strong economic numbers,” she told the diplomatic corps in Malacañang.

“Our stock market has never been higher in a decade nor delivered better return for investors. The peso is at its highest point in recent years and exports have grown by double-digits.”

It was the third year in a row that the GDP expanded by 5 percent or higher, and it came following the 6-percent and 5-percent growth, respectively, in 2004 and 2005.

But Romulo Virola, secretary general of the National Statistical Coordination Board, said the peso’s appreciation by more than 7 percent against the US dollar reduced the peso value of exports, call center revenues, foreign direct investments, and tourism receipts.

“Growth would have been higher if the peso had been trading at the same value as in 2005,” Virola said. Exports grew by more than 15 percent in dollar terms, but only by 12.1 percent in peso terms at constant 1985 prices, he said.

The peso’s appreciation aside, the gross national product—GDP plus foreign income—grew at 6.2 percent last year against 5.6 percent in 2005, and due mainly to surging remittances from Filipinos working abroad.

GDP expanded by 4.8 percent, and GNP by 5.9 percent, in the fourth quarter despite the series of typhoons that brought down farm output.

Economic Planning chief Romulo Neri said last year’s growth was within the 5.3- to 5.6-percent band forecast by the National Economic and Development Authority, although it was one percentage point below the low end of the official growth estimate of 5.5 percent.

For 2007, Neda chief Dennis Arroyo said the government would stick to a growth target of 6.1 to 6.7 percent, and mainly because of the expected increase in infrastructure spending.

“Even if we factor in the expected global demand downturn in 2007, we can shift gears by harnessing our domestic engine,” Arroyo said.

Neri said last year’s growth owed much to strong private consumption (+5.5 percent) and robust government spending (+5.7 percent).

On the production side, the agriculture, fishery and forestry sector grew 4.1 percent, exceeding the official projection of 3.4 to 3.9 percent “despite the onslaught of strong typhoons in the fourth quarter,” Neri said.

The industry sector rose by only 4.8 percent on account of the mining sector, which contracted by 6 percent, but manufacturing picked up by 5.4 percent.

Construction grew at a respectable pace of 4.6 percent as public construction started to revive, Neri said.

Services continued to boost the economy, growing by 6.3 percent and getting support from banking and finance.

“[The] record levels of [worker] remittances boosted trade and private services, which grew 5.5 percent and 6.8 percent, respectively,” Neri said.

He said last year’s economic expansion led to a further improvement in the labor market, which grew by 2 percent.

“The 2007 outlook will depend primarily on how the downside risks in both external and domestic fronts affect the economy,” he said.

The passage of the 2007 budget augured well for the economy this year.

“With the macro reforms already in place, and given the government’s commitment to sustain them, the expected 2007 budget is seen to generate some growth momentum and possibly investment interest in the country,” Neri said.