MANILA, November 28, 2011 (AFP) – The Philippines said Monday economic growth slowed to 3.2 percent in the third quarter for one of the worst performances in Southeast Asia, as tighter controls on government spending acted as a drag.
Economic Planning Secretary Cayetano Paderanga said the economic woes in the United States and Europe, typhoons that hit the country’s farming sector and high fuel costs were major factors in 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.
President Benigno Aquino, who took office in the middle of last year, has vowed to cleanse all government agencies of corruption, and part of that process has required far stricter controls on spending.
The economic growth of 3.2 percent from July to September was down from 7.3 percent in the same period last year, and dragged the nine-month expansion in 2011 to just 3.6 percent.
Paderanga said 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 programme” impacted on the construction sector.
The programme 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.
The head of the Association of Securities Analysts of the Philippines, Astro del Castillo, said economists were disappointed with the state of the economy, and said the government should have spent more to spur growth.
“We’ve all been held captive by this PPP programme,” del Castillo told AFP.
“In reality there are other action plans that could have continued to boost the economy, like spending on basic infrastructure… in far-flung areas, as opposed to waiting for the big projects to come on line.”
However Paderanga said the Philippine 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 72 billion pesos ($1.67 billion) announced by Aquino in October and due to spent by the end of the year would also have an impact.