Statement: Finance Secretary Purisima on the Q4 and full-year 2015 GDP growth

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Statement of Finance Secretary Cesar Purisima
On the fourth quarter and full-year 2015 GDP growth

[Released on January 28, 2016]

The economy grew by 6.3% in the last quarter of 2015 and 5.8% for the full year, the fastest among the ASEAN-5. In a year marked by strong external headwinds, the Philippines has kept its quarterly average growth rate of 6.0% for the duration of the Aquino administration, pushing the six-year moving average of real GDP growth at 6.2% as of 2015—the highest since 1978.

Economic performance remains resilient and robust amid a global slowdown, buoyed by consistently vibrant domestic demand and ample fiscal space. Household consumption grew 5.4% in Q4 2015 compared to 5.0% in the same period last year, while government consumption caught up and accelerated by double-digits to 17.4% from the 9.4% posted in Q4 2014. Public construction leapt 51.0% from 3.3% same period last year, reflecting sustained acceleration as solutions to improve spending are institutionalized.

Longer-lasting and better quality growth remains to be the government’s priority. Since 2009, capital formation has taken on an increasingly larger role among growth drivers, with a showing of 13.5% for the quarter, compared to 3.0% last year—contributing 4.9 percentage points to growth. In supply side terms meanwhile, manufacturing has gained about 2 percentage points in terms of its contribution to GDP since 2009.

BPOs and tourism continue to be bright spots as exports of services grew 30.2% in Q4 2015 despite a global dampening, faster than Q4 2014 growth of 5.0%. The Philippine IT-BPO industry, projected to generate 1.3 million jobs by 2016, is a key driver of sustained growth, allowing more and more Filipinos to boost consumption growth. This is complemented by healthy tourist arrivals figures (14.9% year-on-year growth in October 2015).

We are well-positioned to withstand the turbulence caused by uncertainty in the global landscape. Running a 12-year record of being a current account surplus country, we are estimated to post a surplus of $14.2 billion or 4.4% of GDP in 2015. Reserves are more than healthy at $80.6 billion as of end-2015, enough to cover 10.3 months of imports and equivalent to more than 6x the country’s external short-term funding requirements.

We have reduced the ratio of general government debt to GDP from 42.2% in 2010 to 36.2% so far in mid-2015, and reduced the domestic-foreign debt mix to 65.4%-35.6%. Looking back to 2010 where we first started, when reliance on foreign sources of financing was at 42.4%, I am confident we are better prepared now to sail through headwinds with a more resilient debt structure.

Fresh from another credit rating upgrade, the Philippines builds on the fastest 5-year run of growth in the last 40 years as the world’s most upgraded sovereign. The economy is taking on its best shape yet. With the tax effort rising from 12.1% in 2010 to 13.7% (for January-November 2015), we can expect to sustain this stretch of golden opportunity as the Aquino administration ramps up investments in both people and infrastructure.

Cautious optimism, in spite of the global environment, is not only warranted but reasonable. Discipline, in staying the course of good governance, is necessary.