Statement of Finance Secretary Cesar V. Purisima
on the Q4 and Full Year 2014 GDP Growth
“The fourth quarter and full year growth rates of 6.9% and 6.1% respectively, resoundingly affirm that the Philippine economy is on an upward growth trajectory buoyed by strong macroeconomic fundamentals. Despite the challenging external environment in the global economy, both the Q4 and full year growth rates exceeded market expectations, lodging the Philippines firmly among the three fastest growing countries in Asia.
“Uneven global growth and varying monetary policies precipitate higher market volatility, differentiating the fundamentally strong economies from the weak ones. The Philippines’ solid macroeconomic fundamentals however—namely our strong domestic consumption, abundant foreign exchange reserves, stable banking sector, manageable inflation, ample fiscal space, and declining debt burden—proves it has more fundamental strength than most peers to fuel long-term growth prospects and buttress against vulnerabilities to external shocks.
“The robust, broad-based growth bodes well for this administration’s inclusive development agenda, as all sectors including agriculture contributed to the acceleration of the economy. With extensive fiscal space, government spending reversed itself to a 9.8% uptick in Q4, while acceleration in the services sector grew by 6.0% owing to a boost in public administration and defense.
“Disbursement performance incentives have clearly worked in our favor in Q4. This reflects the government’s continuing commitment to use the ample fiscal space we have worked hard for to boost spending on critical public investments.
“We are pleased to note that our investments in agricultural infrastructure and technology are bearing fruit with higher agricultural output for Q4. The industrial sector maintains its fast-paced growth with construction expanding by double-digits and manufacturing remaining as the biggest contributor to the sector’s growth at 7.3%. Lower oil prices contribute to an even more robust growth on the demand side, with consumption accelerating to 5.1% and net exports picking up by 47.4%.
“The government remains fully committed in generating new investments to sustain our rapid growth in the long term. We are confident our continuing efforts to decongest the ports and to develop our infrastructure will further unlock our growth potential.
“Further, the country’s favorable investment climate, supported partly by its investment-grade sovereign credit ratings, is expected to attract more job-generating, private-sector investments. For example, foreign direct investments (FDIs) surged 64% from just January to October 2014 alone.
“Once passed, the priority bills in Congress, including the proposed fiscal incentives rationalization and the amendments to the Build Operate Transfer Law and the Foreign Investments Negative List, are expected to further fuel growth over the medium term.
“Consistent with the reform-oriented character of this administration, we are working to draft a comprehensive tax reform package to re-engineer a more competitive and equitable economy. We expect our sustainable reform initiatives to further power our ascent in an already virtuous cycle of inclusive growth for all Filipinos.”