Press Conference on the Performance of the Philippine Economy
for Third Quarter 2017
November 16, 2017
ERNESTO M. PERNIA
Socioeconomic Planning Secretary
Partners from the Philippine Statistics Authority,
Colleagues in government,
Friends from the media,
Ladies and gentlemen,
We seem to have a streak of good news this week. After our successful hosting of the Asean summit, I am pleased to share with you yet another good news. The Philippines remains one of the best performing economies in Asia with an impressive growth of 6.9 percent in the third quarter of the year. We are likely to rank second in Asia this quarter, next to Vietnam’s 7.5 percent and ahead of China’s 6.8 percent and Indonesia’s 5.1 percent.
The Philippines’ growth surpassed market expectations, given the 6.6 percent consensus median estimate. It is faster than the upwardly revised 6.7 percent growth in the preceding quarter and slightly slower than the 7.1 percent growth in the same period in 2016. With a year-to-date growth average at 6.7 percent, we are optimistic that we are on track in meeting the full-year target range of 6.5 to 7.5 percent GDP growth for 2017.
We attribute the country’s growth performance to sustained strong growth in exports and improvements in public spending, which then boosted the manufacturing subsector and the services sector.
On the demand or expenditure side, sustained recovery in public spending pushed growth during the quarter. Public consumption was up 8.3 percent on account of higher spending on personnel services with the raise in the base pay of civilian government employees and allowances of the military and uniformed personnel, as well as the filling-up and creation of positions at the Department of Education. This is in line with the government’s commitment to dependable and timely delivery of public services.
We are now seeing a sustained improvement in government spending in a run-up to our massive infrastructure program–the Build, Build, Build–which will continually unfold in the months ahead. This is expected to ramp up public spending even further. We see construction activities and public spending making a headway in line with the government’s aim to spend 5.3 percent of GDP this year for infrastructure and up to 7.4 percent by 2022.
Private consumer spending, on the other hand, eased to 4.5 percent in the third quarter. But we expect a pick-up in household consumption in the last quarter of the year due to the holiday season.
So, imagine if both public and private spending are both on a roll. We are likely to see the economy steadily going on an upward trajectory.
Apart from this, the government is working towards reforming the tax system as we expect the Tax Reform for Acceleration and Inclusion Act or TRAIN, to be implemented as soon as it is enacted into law. This seeks to create a tax system that is simpler, fairer and more efficient. The take-home pay of millions of Filipinos will increase while we adjust the excise taxes on certain products to generate income for the government. This tax reform package will fund about half of the government’s infrastructure program while providing relief to lower- and middle-income earners.
To keep the country’s growth momentum, we are working hard in fast-tracking the implementation of the Build Build Build program. With private construction exhibiting a downtrend for two consecutive quarters, the government’s infrastructure program will open more opportunities for the private sector to expand business activities in construction and operation and maintenance and increase their capital spending.
The end of the conflict in Marawi City last month is also a highly welcome development. The reconstruction efforts to follow in the coming months will help the people to get back on their feet and provide a boost to the local economy of Marawi and Mindanao in general.
On the supply side, the services sector continues to be the main contributor to overall growth. It grew by 7.1 percent in the third quarter. Industry growth grew faster and was broadly steady at 7.5 percent.
Agricultural production eased to a 2.5-percent growth. It will likely continue to post positive growth, however. But farmers still face risks due to weather disturbances. The damage of Typhoons Paolo and Ramil might further slow down agriculture and fisheries production in the next quarter.
With this, we must further strengthen the resiliency of communities. How do we do this? The government should intensify measures to increase access to innovative technologies and intensify credit programs, particularly crop insurance for farmers.
We request Congress, together with government agencies involved in disaster risk reduction, to conclude the review of the Philippine Disaster Risk Reduction and Management or DRRM Act of 2010 to make our institutions more effective in ensuring that communities in the country are more resilient to natural and man-made shocks.
The figures we have here show that the country’s economic activities remain robust. It demonstrates that we are on course in reaching our overarching goals of building an economy that serves everyone and leaves no one behind — Matatag, Maginhawa, at Panatag na Buhay para sa lahat as we have spelled out in AmBisyon Natin 2040 – the collective long-term vision and aspirations of the Filipino people in the next 25 years.
However, all of us know — and there is a growing consensus on this — that the country’s growth cannot be measured by GDP alone. It is not sufficient to guide us in policy and business decisions.
This leaves us with many tasks at hand. Rightfully, the Philippine Development Plan 2017- 2022, the Philippines’ blueprint for socioeconomic development serves as our guide. With the directive of President Duterte through Executive Order No. 27, all government agencies and instrumentalities, including GOCCs and LGUs, must work towards the full implementation of the PDP.
Among the strategies outlined in the PDP are measures to increase the income of farmers and fisherfolk and their access to economic opportunities, new technology and financial instruments. We have to remember that agriculture is a key to economic growth and development. But, as our population increases (albeit at more manageable rates) and as we expand our physical capacity in terms of roads, bridges, housing and commercial establishments, we need to think of breakthrough innovations in our agricultural sector. Food production needs to be more efficient, having to make do with less land; industrial crop production needs to expand in order to supply the raw materials required by the manufacturing sector. This will increase the value of agriculture, and hence, the income of farmers.
We request Congress to amend domestic laws governing the rice sector. Our traditional way of helping farmers has been to artificially increase the price of rice. This adversely affects consumers especially the poor (and yes, including the farmers who are also consumers) and discourages them from producing what could be the more optimal crop choice given their context. Removing the quantitative restriction on rice, whilst providing technical and other assistance to farmers on crop diversification, will reduce the consumer price of rice and encourage farmers to make the most productive use of their land and labor resource.
In conclusion, the country’s impressive economic growth does not stop here. We remain motivated in persisting tirelessly to achieve our collective goal of a matatag, maginhawa, at panatag na buhay para sa ating lahat!
Thank you and have a great day ahead.