ERNESTO M. PERNIA
Socioeconomic Planning Secretary
Press Conference on the Performance of the Philippine Economy
for First Quarter of 2018
May 10, 2018; 10:00 am
Astoria Plaza, Ortigas Center, Pasig City
Colleagues from the Philippine Statistics Authority,
Coworkers in government,
Friends from the media,
Ladies and gentlemen,
We are pleased that the performance of the Philippine economy for the first quarter of 2018 hit 6.8 percent. This is the tenth consecutive quarter the economy was able to achieve an output expansion of 6.5 percent or above. It is at par with market expectations and close to the low-end of our full-year growth target of 7.0 to 8.0 percent for 2018.
Parenthetically, if not for the Q1 2017 to Q1 2018 rate of increase in inflation, real GDP growth could have been well within our growth range target of 7 – 8 percent.
In any case, the Philippines remains one of the best performing economies in the region, next to Vietnam’s 7.4 percent growth, same as China, and higher than Indonesia’s 5.1 percent.
This performance demonstrates that we have firmly laid the groundwork for reforms in some of the sectors.
On the demand side, the upbeat performance in public construction, government consumption, and capital formation indicates that our reform efforts are bearing fruit and infrastructure development is accelerating, as planned.
However, despite improving labor market conditions, private consumption eased to 5.6 percent due to rising inflation and interest rates, and weaker consumer confidence.
External demand also weakened significantly. Growth in exports of goods eased to 2.9 percent, after consistent growth averaging 21.1 percent in 2017. Net exports thus worsened during the quarter. This is something we need to keep an eye on.
On the supply side, the 7.9 percent growth in industry was backed by the manufacturing and construction sub-sectors’ continued robust expansion. Again, this indicates that our Build! Build! Build! program is gaining ground.
The services sector also grew by 7.0 percent but agriculture growth weakened to 1.5 percent, after bouncing back from El Nino last year. The fishing subsector further declined by 3.7 percent, its fourth consecutive quarter of decline.
Let me just highlight that production of palay and corn increased, growing by 4.6 and the 4.7 percent, respectively, coming from a high base. Yet, the consumer price of these commodities is on the rise. This calls for a comprehensive study. The fisheries sub-sector also calls for closer study. Indeed, for inclusive and sustained growth to happen, the agriculture and fisheries sector needs extensive and deep reforms.
But even as we face challenges, we remain hopeful that at least the lower end of the full year GDP growth range target of 7-8 percent is doable. Domestic demand is expected to increase in view of the recently approved tax reform package, which is deemed to boost income and consumption of tax payers. However, we need to boost investor and consumer confidence to sustain this growth.
For consumers, we need to address sources of rising inflation, even if the uptick brought by the temporary effects of TRAIN are expected to gradually ease. In the short term, we need to hasten mitigating measures such as the Unconditional Cash Transfer to the poorest 50 percent of households, plus the Pantawid-Pasada subsidy for jeepney drivers.
The more enduring solutions will require structural reforms. We continue to pressure Congress to amend Republic Act 8178 or the Agricultural Tariffication Act. The lifting of Quantitative Restrictions or QRs on rice should be pursued in earnest, as it will reduce the retail price of rice by as much as PhP4.00 – 7.00 per kilogram. This will increase the purchasing power of low-income households, aside from bringing down inflation.
We also need to restructure the National Food Authority to rid it of its import monopoly and trading functions, so that it can focus on buffer stocking to meet emergencies. This reform is necessary for NFA to focus on its function of maintaining a national buffer stock for food security, and refrain from rice trading to avoid distorting the market.
Moreover, we also need to address rising prices of fresh fish, meat, and vegetables. As demand continues to rise with a growing population and expanding economy, reducing food inflation is necessary to increase people’s purchasing power.
To ease price pressures in the agriculture sector (i.e. fresh fish, meat and vegetables), we need to promote productivity-enhancing measures. The sector needs efficient postharvest processes, transport and logistic networks. The sector must also have increased access to innovative technologies and credit programs, particularly crop insurance, which could improve resiliency of farmers and fisherfolk from weather disturbances.
For investors, efforts to reduce the cost of doing business and to ease or lift restrictions on foreign investment will be very important. Easing restrictions in public utilities, retail trade, telecoms, and public procurement are of high priority.
The Build! Build! Build! program, of course, will continue its momentum in providing more opportunities to our country, such as investments, job creation, connectivity, and dependable delivery of public services. To ensure that our capacity for growth is sufficient, we must make sure that our labor force has the requisite skills and competencies to meet the growing demand, particularly for higher level skills, including skills required by disruptive technologies.
Overseas Filipino Workers who are coming back home will be happy to know that we are expecting an annual average jobs creation of 1.1 million, thanks to the Build! Build! Build! program. DOLE and TESDA will provide training to ensure that manpower would get the skills fitted to the required jobs.
We are already more than a year into the implementation of the Philippine Development Plan 2017-2022. And we have recently reported on our achievements, as well as areas for more work with the Socioeconomic Report 2017—which is available on the NEDA website.
We call on our partners, especially in government, to take note of the strategies in the SER to guide us in implementing projects and programs in the coming years.
Let me close by saying that our country’s growth implies that we have the potential to become an upper middle income economy, even as early as next year. As our growth anthem, Tunog ng Progreso goes, pataas nang pataas ang ating akyat.
We have continuously remained strong. More importantly, we remain committed to achieving our goals and to making this growth inclusive for a matatag, maginhawa at panatag na buhay para sa lahat.
Thank you very much and mabuhay tayong lahat!