MANILA, Philippines – A major earthquake and Typhoon Haiyan dampened Philippine economic growth in the first quarter but the economy is still expected to hit its target for 2014, officials said Thursday.
The country’s gross domestic product expanded 5.7 per cent in the first quarter, down from 7.7 per cent for the same period last year and 6.3 per cent in the last quarter of 2013, according to the government statistics agency.
Despite the disasters which occurred late last year, the economy was the third fastest growing in Asia in the first quarter, behind China’s 7.4 per cent and Malaysia’s 6.2 per cent, Socio-Economic Planning Secretary Arsenio Balisacan said.
He said the economy’s performance indicates it will continue to expand in the succeeding quarters. “We remain confident that we will meet the growth target of 6.5 to 7.5 per cent for the full year of 2014,” he said.
The first quarter growth was driven mainly by the services and industry sectors, while agriculture reeled from the impact of the disasters, Balisacan said, citing the millions of coconut trees and other permanent crops felled by Haiyan.
The National Statistics Coordination Board said services contributed 3.8 percentage points to the GDP growth figure, industry added 1.8 percentage points and agriculture only 0.1 percentage point.
The damage to agricultural output disrupted production and supplies, partly explaining the decline in food manufacturing, Balisacan said.
The first quarter GDP growth was below analysts’ forecasts and the first time it has dropped below 6 per cent in nine quarters, said Rajiv Biswas, Asia Pacific Chief Economist at IHS Global Insight.
The growth figures, however, continue to highlight the underlying strength of the Philippine economy, Biswas said, citing domestic consumption fueled by remittances by millions of Filipinos working overseas and public construction as important sources of growth.
Last year’s natural calamities also slowed down the tourism and insurance industries, Balisacan said.
About a month before the typhoon hit in November, killing at least 6,300 and displacing 4 million in the central Philippines, part of the region also was rocked by a major earthquake. The region’s many beach resorts, which were damaged by the typhoon and the earthquake, are among the most popular in the country for local and foreign tourists.
The government’s disaster management agency reported in April that the typhoon alone caused at least 89.9 billion pesos ($2 billion) in damage.
Government infrastructure projects grew by 22.3 per cent but the overall growth in construction was tempered by a 6 per cent decline in private construction partly due to stricter central bank monitoring of banks’ exposure to the real estate industry, Balisacan said.
He said prudential measures that were imposed late last year “to prevent the formation of real estate bubbles” contributed to a slowdown in private construction.
He also said the government has to manage the country’s energy requirements to avert a power crisis. He said measures to “cushion the impact on households and businesses” should be put in place with an expected rise in energy prices before additional capacity is installed next year.
“Also, we see the urgency of speeding up the reconstruction and rehabilitation efforts in the disaster-stricken areas,” he said.
Presidential spokesman Herminio Coloma said the government will focus on encouraging investment in manufacturing, tourism, information technology, business process management, construction, logistics and agribusiness.
He said those industries can provide jobs and decent incomes that will spread the benefits of economic growth.