Reference: Mr Sonny Africa (IBON executive director) | The slowing growth of the Philippine economy in the second quarter of the year affirms its unresolved weaknesses and the need for more out-of-the-box policy reforms. According to research group IBON, the service sector was still the main source of growth rather than the more directly productive agricultural and manufacturing sectors, which both slowed this quarter.
Gross domestic product (GDP) grew 5.9% in the second quarter, which brought first semester growth to 6.1 percent. But the persistent weakness of the economy is highlighted by how seasonally adjusted quarter-on-quarter GDP growth was only 0.2% which is the worst performance in thirteen quarters since the negative 2.4% growth in the first quarter of 2009.According to IBON, the slowdown affirms how the economy is not on any kind of high growth path.
The inclusiveness and sustainability of growth is undermined by how the important agriculture and manufacturing sectors both significantly slowed. One out of three jobs was in agriculture but the sector only grew a tepid 0.7% in the second quarter; first semester growth fell to 0.8% from 6.3% in the same period last year. Manufacturing in turn slowed to 4% in the second quarter which pulled first semester growth down to 5% from 6.9% in the first semester last year. The sector is able to generate less and less employment and accounted for less than one out of ten (8%) jobs in the economy, which is much less than in the late 1950s.
The research group noted that the services sector contributed the most to growth. The biggest part of this growth however came from the very low value-added and low-paying trade subsector, which grew more rapidly at 7.3% in the second quarter from 2.5% last year.
The apparent pessimism of the private sector meanwhile belies the hype about the supposedly dynamic impact on the economy of ‘good governance’. IBON noted that private investment is weakening. Faster second quarter 8.7% growth in durable equipment was still not enough to offset the poor first quarter performance. Moreover, first semester growth of 6.7% was still much slower than the 10.6% in the same period last year. Construction picked up to 9.2% in the second quarter, from a negative 21.5% in the same period last year, but this was wholly accounted for by the government. Private construction in the first quarter contracted by 2.6% from 10.4% growth last year, which was only compensated by a large 45.7% growth rate in public construction.
According to IBON, this pattern of growth is consistent with how the quality of the jobs created has deteriorated. While one million jobs were generated between April 2011 and April 2012, this was wholly from part-time work which grew 2.5 million because full-time jobs fell by 1.6 million. The rising number of part-time and likely low-income workers has caused part-time work to increase to 16.2 million or over four out of ten (43%) jobs in the economy. There were also still 11.7 million unemployed (4.3 million, estimated using the old unemployment definition) and underemployed (7.4 million) Filipinos in April 2012, the group noted. (end)
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