Philippine economy grows 6.7% in 2017

MANILA: The Philippine economy grew 6.7 percent in 2017, remaining one of Asia’s best performers despite a weaker business process outsourcing industry, the government announced Tuesday.
Government spending ensured the country remained one of Asia’s fastest-growing major economies, behind only China and Vietnam, Economic Planning Secretary Ernesto Pernia told reporters.
However he said last year’s growth was slower than the 6.9 percent gross domestic product (GDP) rise in 2016, when consumer spending was boosted during elections that propelled President Rodrigo Duterte to power.
But the 2017 figure was “a good performance,” Pernia said, with China having reported 6.9 percent 2017 GDP growth last week and Vietnam achieving a 10-year-high expansion of 6.81 percent over the same period.
Philippine economic growth in the three months to December 2017 was at an annualized 6.6 percent clip, slower than the previous quarter’s 7.0 percent pace.
The business processing outsourcing industry, worth $23 billion and employing 1.15 million people, was a “major contributing factor to this decline,” Pernia said.
The sector, which has become a major pillar of the Philippine economy, includes call centers and offices that carry out such functions for overseas companies as accounting, medical and legal transcription, software design, animation and even architecture.
Industry officials said investment fell 31.3 percent year-on-year in the three months to last June, with threats by US President Donald Trump to bring back jobs outsourced abroad cited as a key factor.
There was also concern in the Philippines that automation and artificial intelligence could eventually steal call-center jobs.
The Philippines’ fourth quarter growth was marginally lower than market expectations, said Sanjay Mathur, chief Southeast Asia and India economist for ANZ Research, adding the trade balance in the last two months of 2017 also deteriorated.
“The prospects for growth in the Philippines remain solid,” Mathur said, citing the passage last month of Duterte’s tax reform program designed to raise funds for infrastructure spending.
State spending should reinforce already strong domestic demand, Mathur added.
Pernia said the government remained confident it would hit its growth target range of 7-8 percent this year, powered by Duterte’s vow to raise spending on transport, energy, and water supply infrastructure.