2005's Growth: Where did it come from?

Yesterday, the Investor Relations Office (IRO) of the Philippine Government in cooperation with the Bangko Sentral ng Pilipinas (BSP) sponsored a Year-end Economic Briefing, at the Waterfront Hotel, Cebu City. The said economic briefing gave a report on the Philippines' macroeconomic performance in 2005 and the government's plans and programs to sustain and strengthen economic growth for 2006.

In relation to this, IDEA's latest Economic Trends have provided a detailed analysis where did the Philippines' 2005 surprising growth come from. According to IDEA, the Philippine economy regained what seemed to be its dwindling strength with the surprising growth outcome of the 4th quarter of 2005. With the first three quarters only averaging a GDP growth of 4.6%, the 6.1% growth during the last three months of 2005 came as a surprise for many who expected the country's full-year growth to land within the 4% stretch, considering the various macroeconomic and political factors that slowed down the economy for most of 2005. After all, the Philippines started the year with a debt overhang and a fiscal crisis from 2004, while the growth of the Agricultural sector has been painfully slow. In the middle of 2005, a legitimacy crisis racked the political stability of the country as protests erupted in the streets in attempts to unseat the incumbent rulers. This as Filipinos had to sail through the burden of increasing oil prices, which jacked up consumer and production costs.

But with the 4th quarter growth coming out at 6.1%, the Philippine economy managed to achieve a full-year growth of 5.1%, which is the higher limit of the government's revised forecast of 4.8% to 5.1%.

Generally speaking, the Gross Domestic Product (GDP) growth for the fourth quarter was pushed by the stronger performances of the Services sector and Agricultural sector, as the Industry sector also remained resilient amidst the continued hike in global oil prices. The Services sector, with the biggest share to total GDP at 46.8%, grew by 6.7% from 5.9% during the same quarter of 2004 from the consistent growth push from the Finance sector. Industry, on the other hand, grew slightly weaker than last year, as all but one of its sub-sectors showed a deceleration, from 7.2% during the last quarter of 2004 to 6.5% in 2005.

Furthermore, according to the said publication, the Manufacturing sector, grew only by 5.8% from 7.4% as its sub-sectors still reeled under the weight of high oil prices. And lastly, the Agriculture, Fishery and Forestry (AFF) sector managed to recover from its 1.2% growth in 2004 to 4.0% in the last quarter of 2005, still buoyed by the increased demand for aquaculture and the strong growth of the Fishery sector, which has been its main growth driver for the most part of the year. (to be continued)

Editor's Note: Mr. Ed F. Limtingco, is the VisMin Manager of CIBI Information, Inc., a business information and receivables management company. He can be reached at 0917-7220521 or at [email protected]