MANILA - Philippine economic growth in the fourth quarter of 2012 may have surpassed expectations but a local think tank said the numbers exposed the weakness of the agriculture sector which requires a permanent solution.
First Metro Investment Corp. and University of Asia and the Pacific’s Capital Markets Research noted that in the last four years the agriculture, forestry and fishery sectors trended “sluggishly” at a quarterly pace of 1.2 percent, way below the 4.7 percent and 5.8 percent quarterly rates of industry and services, respectively.
“This is despite the fact that almost four out of 10 Filipino workers are in agriculture and basic food processing. Moreover, a great majority of the poor, approximately 70 percent, live in rural [areas],” said its periodic report titled “The Market Call.”
Despite this, the report noted that Philippine policy-makers have been giving less importance to agriculture, forestry and fishery.
“The pale agricultural sector worsens rural poverty, forcing farmers to migrate to urban areas. This, in turn, leads to congestion, rising informal settlers, and extreme joblessness,” the report read.
The think tank pointed out that the National Capital Region (NCR) posted the highest unemployment rate in the Philippines. In October 2012 unemployment rate in NCR stood at 11 percent compared to the national average of 68 percent.
“[This] indicates that the development of the agriculture sector must have greater priority even if the country is moving toward industrialization,” the report read.
The think tank noted that the unemployment problem may not ease anytime soon due to the appreciation of the peso. It projected that the peso may trade at an average of P40 to the greenback for the whole of 2013.
“Economics works on relative prices, and as we make foreign goods and resources cheaper relative to domestic goods and resources, firms will prefer spending on the former [foreign goods]” the report read.
“Despite high growth, employment of domestic resources will not follow. What would be problematic is if policy-makers bask in short-term gains and do not realize that this situation cannot last more than a few years,” it stressed.
The think tank said the peso’s continuous appreciation is a fly in the ointment for the long-term sustainability of the country’s economic growth as it puts exports, business-process outsourcing and overseas Filipino worker remittances under serious threat.
The country’s gross domestic product grew by 6.8 percent year-on-year in the fourth quarter of 2012. For the whole of 2012, the Philippines posted an economic growth of 6.6 percent on the back of the strong performance of the services sector.