Philippine officials voiced confidence the country had escaped a "boom-bust cycle" as they predicted on Thursday that economic growth would accelerate in 2015, after expansion last year beat international expectations. The economy grew 6.9 percent in the fourth quarter of 2014, new figures showed, offsetting weaker growth in the previous nine months to boost full-year gross domestic product (GDP) expansion to 6.1 percent, exceeding forecasts from major international institutions.
The rebound puts the country on a high-growth trajectory not seen in decades that will finally see it shake off its image as the "sick man" of Asia, economic planning secretary Arsenio Balisacan told reporters. Balisacan added that the government expected the economy to grow by between 7.0 percent and 8.0 percent in 2015. "We have avoided the dreaded boom-bust cycle that has hounded our economy for decades," he said.
"What we are seeing in the last five years has never been seen in the last 40 years. The last time we have seen such growth was in the mid-1970s," he said, referencing a period when the Philippines saw annual economic growth rates approaching nine percent. Despite global uncertainties, the Philippines was buoyed by "solid" macroeconomic fundamentals including strong domestic consumption, ample foreign exchange reserves, a stable banking sector and manageable inflation, finance secretary Cesar Purisima said.
Purisima said in a statement that the country "has more fundamental strength than most peers to fuel long-term growth prospects and buttress against vulnerabilities to external shocks." On a full-year basis, the Philippine economy grew at a rate second in Asia only to China's 7.4 percent, and narrowly outpacing Vietnam's six percent, Balisacan said. "With this upbeat year-end performance, the economy is anticipated to gain further traction in 2015," he said.
Balisacan however conceded that such high growth rates must be sustained over 20 years before they could be felt by the poor, as shown by the experience of other countries. "It's a long way to go before we can effectively make this growth shared broadly. There's so much to do. There's no shortcut to it. We have to deepen reforms," he said.
The full-year economic growth rate of 6.1 percent exceeded forecasts of 6.0 percent by the World Bank and the International Monetary Fund, but fell short of the government's targeted range of between 6.5 percent and 7.5 percent. The economy grew by an impressive 7.2 percent in 2013. The 2014 fourth quarter growth figure of 6.9 percent was also an improvement from the 6.3 percent growth posted in the same period in 2013.
Analysts, meanwhile, largely echoed government confidence about the economy. "Overall, this remains consistent with our long-held view that the economy is on a solid growth trajectory," Nomura research analyst Euben Paracuelles said. Barclays analysts Rahul Bajoria and Bill Diviney, meanwhile, predicted expansion will be "robust" this year as the Philippines is expected to benefit from a marked drop in world oil prices while the central bank is expected to hold off on any interest rate hikes until the fourth quarter.
The country's economic drivers - services, industry and agriculture - all posted robust growth in the fourth quarter, with the agriculture sector seeing 4.8 percent expansion compared to 0.9 percent in the same period in 2013. Balisacan conceded that there were still "lingering and uneven external conditions" such as sluggish world trade, low commodity prices and fears of higher interest rates looming on the horizon. But he said the economy would likely remain strong in 2015, lifted by further improvements in agriculture, favourable exports, rising domestic demand for manufactured goods, and even early spending for the Philippines's 2016 national elections.