Home » Press Releases » PH 2018 economic growth at 6.2%, short of lowered target

The Philippine economy grew 6.2% in 2018, lower than the government’s downgraded target of 6.5% to 6.9% and down from the 6.7% growth in 2017, as manufacturing and agriculture recorded slower growths in the last quarter.

The Philippine Statistics Authority said the full-year gross domestic product (GDP) resulted from the 6.1% growth in the fourth quarter of 2018, and the downgraded third- quarter GDP of 6% from the initial 6.1%.

The country’s full-year GDP still makes it one of the fastest growing economies in Asia, next to India, Vietnam, and China, according to a joint statement by the National Economic and Development Authority, Department of Finance, and Department of Budget and Management.

On the supply side, the industry sector grew a robust 6.9%, fueled by the surge in construction, which grew by double digits to record its fastest pace since the first quarter of 2013.

Manufacturing, however, is “an area of concern” as it grew by only 3.2% in the fourth quarter of 2018, a deceleration from 7.9% during the same period in 2017. The joint statement said the slowdown is due to the continuing US-China trade dispute, which dampened global demand, and the series of oil price increases in the world market amid sanctions on Iranian oil exports.

To remedy this, the joint statement said the government needs to address policy uncertainties and increase macro-competitiveness by enhancing the efficiency of transport, communications, and the overall logistics network.

“To ensure inclusivity, we need to focus on the integration of industries between small and medium enterprises on one hand, and large establishments on the other,” the statement said.
It also saw the need to attract more investments, and to pass bills amending the Foreign Investment Act, the Retail Trade Act, and the Public Service Act.

Meanwhile, agriculture slumped to a growth of 0.8% from 4% last year, with palay (rice) contracting by 1%.
The drop in palay, sugar cane, and cassava production tempered the gains of the sector in the fourth quarter. The dip was also due to several typhoons that hit Luzon, and inadequate irrigation and insufficient rainfall in Central Visayas.

On the demand side, household consumption improved slightly amid increased private spending on food and non-alcoholic beverages, largely on account of slower inflation rates for these commodities.

Meanwhile, government spending remained stable going into the fourth quarter. For the year ahead, the government expects household consumption to recover as inflationary pressures subside, and given a subdued outlook on international oil prices, and the expected reduction in rice prices from the enactment of the Rice Tariffication Law.

Potential growth drivers

Potential growth drivers in 2019, meanwhile, include the upcoming midterm elections and the preparations for the Southeast Asian Games in November. The creation of the Bangsamoro Autonomous Region will likewise open up growth prospects both for the region and for the wider economy, the agencies said.

“For 2019, we call for a cohesive reform agenda for the country. As we near the release of the Socioeconomic Report 2018 and mid-term updating of the Philippine Development Plan 2017-2022, we hope that the whole of government will be on the same page in addressing the challenges of the different sectors. More than just pockets of success in fulfilling their respective mandates, agencies, we hope, will see the bigger picture—that of having every project and every program lead to a matatag, maginhawa at panatag na buhay para sa lahat [stable, flourishing, and peaceful life for all],” the agencies said.

For this year, economic managers remain optimistic that the 7% to 8% annual GDP target will be met.

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