The Philippine economy grew 5.8 percent in 2015, the slowest pace in four years, dragged down by government underspending, sluggish farm production and a sharp drop in merchandise exports.
Data from the Philippine Statistics Authority showed Thursday that while the gross domestic product grew 6.3 percent year-on-year in the fourth quarter, beating market expectations, full-year growth was registered at 5.8 percent.
Investors in the stock market cheered the fourth-quarter growth, as the 30-company benchmark Philippine Stock Exchange index climbed 56 points, 0.9 percent, to close at 6,563.38 Thursday.
The full-year GDP growth was one of the fastest in Southeast Asia, but fell short of the government’s target range of 7 percent to 8 percent. It was also the slowest in four years, after the expansion of 6.1 percent in 2014, 7.1 percent in 2013 and 6.8 percent in 2012.
Finance Secretary Cesar Purisima said the country’s economic performance last year was the best among the five largest economies in the Association of Southeast Asian Nations.
“In a year marked by strong external headwinds, the Philippines has kept its quarterly average growth rate of 6 percent for the duration of the Aquino administration, pushing the six-year moving average of real GDP growth at 6.2 percent as of 2015—the highest since 1978,” Purisima said.
Economic Planning Secretary Arsenio Balisacan said while the 2015 GDP growth was lower than what the government targeted for the year, “this was respectable given the difficult external environment, the onset of El Niño dry spell and the challenges in government spending in the first semester.”
The gross national income, which includes foreign exchange inflows, expanded 6.2 percent in the fourth quarter and 5.4 percent in the whole of 2015.
Balisacan, who is leaving the National Economic and Development Authority to become the first chairman of the anti-monopoly body Philippine Competition Commission, said for 2016, a 7-percent growth rate was achievable.
“With sound fundamentals and ongoing structural changes in the economy that make it more resilient to shocks, we can expect higher growth for 2016 as the global economy also picks up,” he said.
“Nonetheless, there are remaining challenges that the next administration will continue to confront. Given serious threats from climate change and the realities of a global economy, we cannot afford to be complacent,” he said.
Data showed the services sector carried the bulk of growth in 2015. The sector grew 6.7 percent in 2015 while the industry and agriculture sectors expanded 6 percent and 0.2 percent, respectively.
Government spending rose 9.4 percent while public and private investments increased 13.6 percent. Public construction picked up 20.6 percent.
“We attribute these remarkable improvements in spending performance to two main factors. First, we have substantially increased infrastructure spending over the last five years as we seek to address infrastructure challenges and put us in step with other Asean emerging economies which spend a higher percentage of GDP on infrastructure,” said Budget Secretary Florencio Abad.
Balisacan said the economy would face several risks in 2016, including the El Niño dry spell that could still affect the agriculture sector and the global developments that could reduce demand for Philippine products.
Purisima, however, said the country was well-positioned amid external shocks caused by global economic slowdown and the continued decline in oil prices in the global market.
“We are well-positioned to withstand the turbulence caused by uncertainty in the global landscape. Running a 12-year record of being a current account surplus country, we are estimated to post a surplus of $14.2 billion or 4.4 percent of GDP in 2015. Reserves are more than healthy at $80.6 billion as of end-2015, enough to cover 10.3 months of imports and equivalent to more than six times the country’s external short-term funding requirements,” Purisima said.