Philippine Economic Growth

PERFORMANCE OF THE PHILIPPINE ECONOMY

Gross Domestic Product (GDP)

Philippines is a major player in the ASEAN region after recording strong growth in 2012 and 2013 (Table 1). For the first half of 2014 (H1 2014), GDP grew by 6.0%, relatively slower than 7.8% reported in the H1 2013 5.7% due to the haunting effect of Typhoon Yolanda that hit the country during the fourth quarter of 2013 (Q4 2013) and the lingering weakness of the global economy. GDP growth remained private consumption-led, while investments provided some support despite the contraction in private construction. The key drivers of investment were public infrastructure and durable equipment spending, with significant purchases of vehicles, airplanes, and machineries. On the supply side, the services sector continued to be the main driver of growth while agriculture sector remained weak. Government consumption declined sharply due to the slowdown of major government expenditures for salaries and wages as well as Maintenance and Other Operating Expenditures (MOOE) for the implementation of programs and projects amid concerns on the misuse of government funds. Meanwhile, net exports recovered after 5 quarters of contraction in line with the robust performance of service exports, which includes the fast growing business process outsourcing (BPO) industry.

Table 1. GDP Growth Rates in the ASEAN 5 (2010-2013)

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*Source: Ateneo

Poverty and Job Creation

Poverty incidence declined by 3 percentage points from 2012 to 2013, elating 2.5 Million Filipinos out of poverty. Poverty reduction in 2013 seemed to be driven by non-job income, given slower job creation in the period covered by the household survey. In January 2013, job creation was moderate and in April 2013, job destruction was observed. This suggests that the decline in poverty might be largely driven by other sources of income, such as foreign and domestic remittances, subsidies like the Conditional Cash Transfers or election-related...