THE Philippine economy grew 7.0% year-on-year in the third quarter of 2013, the slowest pace in more than a year, with growth driven by the services sector and increased investments in fixed capital, the National Statistical Coordination Board reported last week.
Last quarter’s growth was slower than the 7.3% recorded last year and the 7.6% achieved in the second quarter, but still boosted growth for the first nine months of the year to 7.4% from 6.7%.
The outlook for full-year expansion now looks dim due to damage from Supertyphoon Haiyan (local name: Yolanda), before reconstruction boosts economic activities.
While increased spending has sheltered the nation from global turbulence, the government has said growth will probably ease this quarter after Haiyan destroyed roads, farms, towns and an entire city in the Visayas.
The Philippine economy may expand between 4.1% and 5.9% this quarter, Economic Planning Secretary Arsenio Balisacan said on Nov. 14, commenting on the effects of the storm. He said the government’s full-year growth target of 6% to 7% is “very doable.”
“We would still expect GDP for the full year to come close to 7%,” Balisacan said.
He added that the Philippines remains the fastest-growing economy among the middle economies of Southeast Asia, but admitted that the destruction caused by Haiyan will have a big effect on the domestic economy.
“It’s quite substantial,” Balisacan said, adding that the provinces of Eastern Samar and Panay as well as the rest of the Central Visayas contribute as much as 12% to the country’s overall economic growth.
Trinh Nguyen, an economist at HSBC Holdings Plc in Hong Kong, was quoted in a Bloomberg report as saying Haiyan “will likely damp growth momentum in the fourth quarter and until the first half of 2014.” Still, the nation’s fundamentals remain favorable, as “inflation is benign, credit is cheap, and domestic demand is strong,” she said.
Balisacan said the effects of the recent disaster depends on how quickly the government can rehabilitate and restore economic activities in the affected communities.
“The intention is to get normalcy as quickly as possible,” he said.
Rebuilding in typhoon-affected areas may take three to four years, and the government plans an initial budget of P38.8 billion to cover a year, Balisacan said.
The services sector gained a boost from the robust performance of real estate, renting and business activities, trade and financial intermediation sustained by the accelerated growth of the industry sector, said NSCB secretary general Jose Ramon Albert.
“On the demand side, growth in the third quarter of 2013 came from increased investments in fixed capital, reinforced by consumer and government spending, and the robust growth in external trade,” Albert said.
With accelerated growth of net primary income (NPI) from the rest of the world in the third quarter by 11.9%, gross national income (GNI) expanded 7.8% in the third quarter of 2013 from 7.3% a year earlier.
Albert said on a seasonally adjusted basis, GDP growth was 1.1% in the third quarter of 2013 but this was a deceleration from 1.6% in the previous quarter while GNI accelerated by 1.8% in the third quarter of 2013 from 1.1% in the second quarter of 2013.
He said the entire agriculture sector rebounded its seasonally adjusted growth to 0.7% from a decline of 0.7% in the previous quarter, while industry decelerated to 0.3% from 1.4%.
On the other hand, the services sector recorded a 1.6% seasonally adjusted growth for the third quarter from 2.1% in the previous quarter with the positive growth of all its subsectors.
With the population seen growing 1.6% to 97.6 million, per capita GDP grew 5.2%, per capita GNI rose 6.0% and per capita household final consumption expenditure fell 4.5%, Albert said.
Damage from the Nov. 8 typhoon, which left more than 5,500 people dead and displaced 3.5 million, is estimated at US$6.5 billion to $14.5 billion, according to catastrophe modeling firm AIR Worldwide. The local economies of the affected areas in central Philippines, which account for about 12.5% of GDP, may contract 8% to 10% next year, Finance Secretary Cesar Purisima said Nov. 12.
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