Manila—(PHStocks)—The government moves closer to achieving its targets in the Philippine Development Plan 2011-2016, despite unexpected external shocks that have threatened economic growth during the first two years of the Aquino administration, according to the newly released Socioeconomic Report (SER) 2010-2012 of the National Economic and Development Authority (NEDA).
External events such as the Japan disaster in the first quarter of 2011, the Thailand flooding in the third quarter, the social unrest in the Middle East and the African region weakened the economy in 2011, affecting trade, foreign direct investments, and other financial channels, the report said.
Also in 2011, the Euro debt crisis and the sluggish recovery of the United States economy from the financial crisis shook investor confidence and resulted in tighter credit and a decline in investments. The delay in spending for public construction further dampened growth.
However, by the first half of 2012, indicators show that the targets set by the Philippine Development Plan 2011-2016 are likely to be attained, according to the SER.
The economy showed a more aggressive stance in the first six months of 2012 as real Gross Domestic Product (GDP) expanded by 6.2 percent. The growth was driven by services and industry on the supply side and by household consumption, government consumption, and net exports on the demand side.
On November 28, the National Statistical Coordination Board announced that the country posted a 6.5 percent growth in the first three quarters of 2012, and thus will likely surpass the 5 – 6 percent full year growth assumption of the Development Budget Coordination Committee.
Meanwhile, headline inflation remained well within the government’s target range of 3 to 5 percent for 2010 until the first half of 2012, the SER noted.
According to the report, with a benign inflation outlook, the Bangko Sentral ng Pilipinas (BSP) reduced its policy rates to support domestic economic activity and reinforce investor confidence. The lower domestic interest rates supported the upbeat lending activities of banks during the period under review. According to the National Statistics Office, full-year inflation averaged 3.2 percent.
Moreover, the sustained inflow of remittances from migrant Filipino workers, net portfolio investments, and foreign direct investments contributed to further strengthen the peso.
The report noted that fiscal performance is generally commendable, but still has room for improvement given the path of revenue collection. Revenue collection performance was still below programmed targets for 2011, as well as for the first half of 2012.
Furthermore, the report noted the country’s improvements in its ranking in the Global Competitiveness Report 2012-2013 of the World Economic Forum and the 2011-2012 Doing Business Report of the International Finance Corporation/World Bank.
These developments translate to an average employment generation for the first two years of the current administration at 997,000 per year, which is close to the PDP target of 1 million annually. However, key weaknesses remain in terms of high underemployment rate and the rise in part-time employment, the report noted.
It also highlighted the critical reforms of the Aquino administration in good governance, the overarching strategy of the PDP 2011-2016.
For the past two years, the Aquino administration put in place critical reforms to operationalize the Plan’s strategies and lay the foundation for effective and honest governance. President Aquino is the first Chief Executive to file corruption charges for erring government officials across all branches of government, according to the report.
Looking forward, the country is expected to pursue a balanced growth policy that would harness the services, industry and agriculture sectors, the first being the country’s largest contributor to the economy at present and the latter two having untapped potentials and with substantial room for improvement.
To catch up with the targets in the PDP, the government will continue to partner with the private sector in developing the industry and services sector.
The SER 2010-2012 is an assessment of the first two years of the Aquino administration in relation to the targets and strategies set in the PDP 2011-2016.
This can be viewed at: www.neda.gov.ph/econreports_dbs/SER/SER2010-2012new.pdf.
Highlights of the report will be produced and disseminated in print by mid-February.