Statement of Secretary Florencio B. Abad:
On the Philippines’ 5.7% GDP growth
[Released on May 29, 2014]
When 2014 began, the country had only
just begun to right itself from what seemed like an especially
challenging year. The last ten months saw us go through some
considerable setbacks, from corruption scandals in the Philippine
bureaucracy to the devastation caused by Super Typhoon Yolanda.
GDP figures for the first quarter of the
year reflect the difficulties of the work of recovery. Indeed, Yolanda
struck at several sectors crucial to driving growth, particularly the
agriculture and fishing industries.
Nevertheless, other forces helped keep
our economic momentum going, albeit at a slower clip. Expenditures
continued to play a major role in catalyzing growth. Public construction
rose by 22.3 percent, spurred by a 49.2-percent increase in government
expenditures for infrastructure and capital outlay in January and
February. This helped boost the country’s capital formation to 7.7
percent in the first quarter, notwithstanding the 6-percent slump in
private construction in the same period.
Disbursements for public construction
were made largely toward infrastructure projects under the Department of
Public Works and Highways (DPWH) and the Department of Transportation
and Communication (DOTC), as well as the Health Facilities Enhancement
Program (HFEP) of the Department of Health (DOH) and various
infrastructure projects implemented through Grassroots Participatory
Budgeting in the Autonomous Region of Muslim Mindanao (ARMM).
It’s useful to note, however, that the
slowdown in private construction was influenced by some necessary
interventions: the Bangko Sentral ng Pilipinas (BSP) had to tighten
policies to prevent the formation of a real estate bubble. These
involved the stricter enforcement of banking rules, including the
reporting of investments in debt and equity that financed real estate
activities in the first quarter of the year.
Vigorous activity in public construction
was clearly a principal driver in the expansion of our first-quarter
GDP, even as private construction decelerated in the first three months
of the year. Without the Administration’s focused investments in
infrastructure and capital outlay, it’s very likely that GDP growth in
the first three months of 2014 would have contracted further.
Meanwhile, government final consumption
expenditure climbed by 2 percent in the first three months of the year,
thanks to increased public spending on Personnel Services (PS) and
Maintenance and Other Operating Expenditures (MOOE). Disbursements for
PS spiked by 6.3 percent to finance new teaching positions in the
Department of Education, as well as to cover the Magna Carta benefits of
social workers and the rise in pension claims and base pay of the
country’s uniformed personnel. MOOE spending scaled up by just 2.7
percent, as most disbursements for this sector had been frontloaded in
the previous year on account of the election ban.
With the Updated Philippine Development
Plan as the Aquino administration’s blueprint for inclusive growth, we
intend to accelerate disbursements in our bid for stronger and more
inclusive development. For one, the government’s post-calamity
reconstruction and rehabilitation activities—especially in Yolanda-hit
areas—will go a long way in ramping up our public infrastructure
investments. This is on top of the major infrastructure programs already
lined up for this year, given the Administration’s drive to boost
economic services in the country through public construction and capital
outlay.
It’s crucial as well to note that public
infrastructure has advanced by leaps and bounds since the Aquino
administration took over. Government-driven construction has
consistently performed well, and we can expect it to maintain—perhaps
even surpass—its current pace and create a decidedly positive impact on
the country’s economic profile.
Despite the volatility of the global
market, the Philippines still proved to be one of Asia’s best-performing
economies, despite the blows we absorbed in the previous year. Ours is a
position of studied optimism, where we have a full appreciation of the
economic risks in our purview, as well as of the country’s immense
potential for robust development in the next three quarters.
As always, our good governance agenda
and stable economic fundamentals remain at the heart of the Aquino
administration’s campaign for inclusive growth. In this way, reforms for
transparency, accountability, and openness will not just fuel rapid and
sustainable economic progress, but will likewise bring real and
tangible improvements to the lives of Filipinos.
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