GDP growth slows to 3.7% in 2011
MANILA - The Philippine economy slowed sharply in 2011 as it was hit by global headwinds, but momentum will likely pick up this year on the back of stronger government spending, officials said.
The economy expanded just 3.7 percent last year, National Statistical Coordination Board chief Romulo Virola announced, describing the performance as "feeble" following growth of 7.6 percent in 2010.
However growth of 3.7 percent in the final three months of 2011 was up from 3.6 percent in the previous quarter, showing the economy was at least slightly accelerating and offering hope that state pump-priming efforts were kicking in.
"Overall, we expect the economy will be able to regain its momentum this year," Economic Planning Secretary Cayetano Paderanga told reporters.
"We expect that this acceleration of public expenditures will continue well into 2012 and beyond."
Paderanga said the government was sticking to its forecast for economic growth this year of 5-6 percent.
President Benigno Aquino, who took power in 2010, sharply restricted state spending last year as part of a high-profile anti-graft campaign, seeking to ensure all government contracts were free of corruption before releasing money.
However he came under some criticism for putting the brakes on the economy as major trading partners the United States, the European Union and Japan suffered from a range of economic woes.
Paderanga pointed to the financial crisis in Europe, as well as sluggish growth in the United States, as continued major threats to the Philippine economy.
But he said the government, having implemented its anti-corruption reforms, should be able to cushion the domestic economy from external problems by injecting more money into infrastructure projects as well as social services.
"We can now spend every taxpayer peso with full efficiency and high impact on the economy," he said.
Budget Secretary Florencio Abad told AFP a contraction in infrastructure spending had hurt growth in the first three quarters, but stressed this was offset by huge capital outlays in the final three months of the year.
He also noted that the government had this month already released 72.1 percent of the 150 billion pesos ($3.4 billion) earmarked for infrastructure spending for 2012.
"So it is fair to say that we will have higher spending in the first quarter of this year, providing momentum," Abad said.
Investors remain "cautiously optimistic" of the government's economic forecast and promised spending, according to Jonathan Ravales, chief strategist at BDO Securities.
"Our forecast (for economic growth) this year is 4.5 percent, but this hinges on whether we will see a better growth figure in the first quarter," he told AFP.
"It remains to be seen whether the government will plant the seeds of spending today to carry the economic engine going forward.
"Other factors also need to be considered, including the growing uncertainly outside our shores."