RP back as Asia’s laggard with dismal 3.2% Q3 growth

Growth slowed to a dismal 3.2 percent in the third quarter that returned the Philippines to its familar role as a laggard in Southeast Asia, having one of the worst economic performances in the region for the quarter and all the result of poor management of the budget.

Economists saw the minimal expansion, the third consecutive quarter under Aquino that growth had skidded, as resulting from underspending or tighter controls imposed by the administration on the release of public funds that acted as a drag on the economy.

The economic sector that slowed the most was the construction industry which University of the Philippines (UP) economist Benjamin Diokno said contracted due to the failure of the Aquino administration to implement projects which were authorized and approved by Congress.

“Hence, the slowing growth is self-inflicted,” according to Diokno as opposed to the claim of the Palace that the slowing growth was a reaction from the European debt crisis and the still weak US economy.

The country’s performance was below par that of its Asian

neighbors in the quarter such as Indonesia’s 6.5 percent growth, Vietnam’s 6.1 percent, Singapore’s 6.1 percent, Malaysia’s 5.8 percent, and Thailand’s 3.5 percent.

It was also below the 4.6 percent consensus forecast of both international and domestic analysts, including the government’s own forecast of 3.8 to 4.8 percent.

The 3.2 percent growth from July to September was also down from 7.3 percent in the same period last year, and dragged the nine-month expansion in 2011 to just 3.6 percent.

Malacanang admitted that the growth performance in the third quarter was below the government’s target growth during the period.

Instead of admitting fault for Aquino’s defective budget management, deputy presidential spokesman Abigail Valte blamed the economic slowdown on weakenesses being experienced by the United States and Europe.

“Of course we would all want to see higher numbers there but “our economy doesn’t exist in a vacuum, it doesn’t stand alone, it takes into consideration external factors,” claimed Valte as he claimed that the economic turbulence being experienced in the US and Europe has some fallouts on the local economy.

Valte stressed that Aquino only wanted to make sure that government funds are spent wisely and properly to justify delays in the release of government funds to jumpstart the economy.

“In the first quarter we were bent on scrutinizing public disbursements and public releases,” she said.

“ When the acceleration plan was put into effect, we will expect to feel it in the fourth quarter,” she claimed.

Economic Planning Secretary Cayetano Paderanga also blamed the economic woes in the United States and Europe aside typhoons that hit the country’s farming sector and high fuel costs for the lower-than-expected growth figure.

But he also acknowledged that “stricter project reviews for public construction projects contributed to the modest performance of the economy,” while other officials said lower government spending in general was a factor.

Paderanga conceded the government would now be hard pressed to meet its full year growth target of between 4.5 and 5.5 percent.

“It’s going to be difficult,” Paderanga told reporters.

Exports contracted 13 percent year-on-year from July to September as trade with key trading partners the United States, Japan and Europe slowed, according to the National Statistical Coordination Board.

Devastating typhoons that flooded vast tracts of farming land led to the agricultural sector contracting by 3.9 percent year-on-year, it said.

Construction declined 12.2 percent year-on-year, which was partly due to the tighter government controls.

Statistical board secretary general Romulo Virola also said a delay in Aquino’s “public-private partnership program” impacted on the construction sector.

The program had been billed as the cornerstone of Aquino’s economic agenda, under which he had promised to bid out big-ticket infrastructure projects to private investors in partnership with the government.

The projects were envisioned to generate millions of jobs and spur economic growth, but more than a year later they have yet to take off as the government has taken more time than it expected to prepare them.

Paderanga said economic growth in the Philippines in the third quarter was weaker than in most other Southeast Asian countries, with Indonesia, Vietnam, Singapore, Malaysia and Thailand posting stronger numbers.

However Paderanga said the economy would pick up pace in the final quarter, partly because the fundamentals were now stronger due to the government’s focus on improving accountability.

He also said a stimulus package of P72 billion ($1.67 billion) announced by Aquino in October and due to spent by the end of the year would also have an impact.

Finance Secretary Cesar Purisima, meanwhile, highlighted growth in the services sector, which expanded by 5.3 percent in the quarter and was the only brightspot in the economy.

The sector, which actually may have rescued the economy from a contraction consisted of the booming bvusiness process outsourcing (BPO) sector among others.

The sector was the main driver of the 3.2 percent growth recorded from June to September of this year.

The agriculture sector continued growing with 1.8 percent expansion despite the typhoons that hit the country during the period, according to Purisima. Virgilio J. Bugaoisan, Daily Tribune