The Philippine economy, as measured by the gross domestic product (GDP), grew 5.6 percent in 2021, slightly beating the government’s downgraded target band of 5.0 percent to 5.5 percent, rebounding from a 9.6 percent decline in the previous year, the Philippine Statistics Authority (PSA) reported Thursday, Jan. 27.
This recovery came about following a strong growth in the final three months last year, but the robust pace of economic expansion was still not enough to fully bring back the nation to its pre-pandemic levels.
The economy expanded by 7.7 percent from October to December 2021, faster than the revised 6.9 percent growth recorded in the third-quarter, the PSA reported on Thursday, Jan. 27.
The robust economic performance seen in the fourth-quarter was a reversal of the 3.9 percent contraction recorded in the same period in 2020. On a seasonally adjusted quarter-on-quarter basis, the economy also expanded by 3.1 percent.
Cabinet Secretary KarloNograles said the growth is proof that the country's economy is strong and resilient.
“The Palace views the growth of our economy as evidence of the strength and resilience of the Philippine economy,” he said Thursday.
“ continues to beat expectations despite the challenges brought about by the COVID-19 pandemic and natural calamities like Typhoon ‘Odette’,” he added.
“The door to our economic recovery is now fully open,” the government’s economic managers said in a statement read by Socioeconomic Planning Secretary Karl Kendrick T. Chua at a virtual briefing.
“This growth performance was much faster than most analyst forecasts, making the country’s expansion among the highest in the region,” Chua said.
The fourth-quarter GDP also sent a strong signal that the Philippines is on track to rapid recovery despite the impact of Odette, Chua added.
Odette, known internationally as Typhoon “Rai,” was a powerful tropical cyclone that struck the country last December and left P13.8 billion worth of damage to the agriculture sector.
Chua estimated that Odette cost the economy about P33.4 billion, equivalent to 0.17 percent of GDP. It also dragged the full-year growth by 0.05 percentage point.
“This sustained growth was driven by the successful management of risks such as targeting the areas with highest risk and allowing the rest of the economy to open,” Chua said.
Despite the strong growth, the nominal value of goods and services produced by the Philippines from January to December amounting to ₱19.387 trillion was short by P131 billion against the pre-pandemic level of P19.518 trillion.
“We are very close to the pre-pandemic level at the end of 2021. If you look at the nominal levels, it's almost the same. We are just, I think, a few hundred billions short. So we are fully going to surpass it in 2022,” Chua said.
In 2021, the industry and services sectors grew 8.2 percent and 5.3 percent, respectively, representing a strong rebound from the contractions experienced by these sectors in 2020.
The agriculture sector, however, experienced a slight decline of 0.3 percent due to continued challenges such as the African Swine Fever and super typhoons, which affected farm output.
On the expenditure side, private consumption increased by 4.2 percent, a stark reversal from 2020's minus 7.9 percent.
“This indicates returning consumer confidence as a result of relaxed quarantine restrictions and the accelerated vaccination program,” Chua said.
Government expenditure also expanded by 7 percent last year.
Meanwhile, external trade recovered at a faster pace.
Exports grew by 7.8 percent, compared to minus 16.3 percent in 2020. The same trend can be seen in imports with a sustained growth of 12.9 percent in 2021, compared to minus 21.6 percent in 2020.
Moreover, investments recorded a robust growth of 19 percent rebounding from minus 34.4 percent in 2020.
Chua said this was supported by a 37.4 percent growth in public construction as the government proceeded full-steam ahead with the implementation of the Build, Build, Build infrastructure program.
“The strong 2021 performance shows us that we are on the correct path to a resilient recovery. The stage is now set for growth to accelerate in 2022,” said Chua, who also heads the National Economic and Development Authority (NEDA).
The Development Budget Coordination Committee (DBCC), an inter-agency body that sets the country's macroeconomic targets, is forecasting that the economy would grow by seven percent to nine percent this year.
“We are optimistic that we will not only recover to the pre-pandemic level in 2022, but achieve the upper-middle income country status,” Chua said.
The World Bank defines an upper middle-income economy as a country which has gross national income per capita of between $3,956 and $12,235.
“The Duterte administration will stay the course until its last hour in office. We remain committed to rebuilding a stronger economy and delivering on our promise to provide a comfortable life for everyone,” he concluded. (With a report from Argyll Cyrus B. Geducos)