2016 economic growth fastest in three years

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(File photo)

Metro Manila (CNN Philippines) — The Philippine economy grew by 6.8 percent in 2016, according to the Philippine Statistics Authority (PSA) - the fastest growth in the last three years.

The Philippines also posted among the fastest GDP growths in Asia last year, along with China (6.7 percent) and Vietnam (6.2 percent).

PSA reported the country's GDP--which measures a country's total economic production and performance--grew 6.6 percent in the fourth quarter of 2016.

Although this was the slowest quarterly growth last year, it was higher than the 6.5 percent growth in Q4 of 2015. 

PSA said the main drivers of the economy in Q4 were manufacturing, trade, and real estate, renting, and business activities.

Economy 'in good shape'

Finance Secretary Carlos Dominguez said last year's GDP growth indicates the economy is in "pretty good shape" under the Duterte administration.

"This is clear proof that no amount of counterproductive political chatter from certain quarters could undermine the upward trajectory of a domestic economy that is in pretty good shape under a Duterte presidency that is fully committed to sustaining its growth momentum," Dominguez said in a statement.

He said economic growth in President Duterte's first sixth months shows the business community has strong confidence in the president.

Dominguez said the recent GDP growth gives the Finance Department more reason to push for the Comprehensive Tax Reform Program (CTRP), which would adjust the annual income tax rates.

Studies have shown poor and middle-class Filipinos could stand to gain from the CTRP.

Projected growth

The Finance Chief said he expects the economy to grow by 6.5 to 7 percent in 2017, as projected by international and local financial institutions and experts.

Socioeconomic Planning Secretary Ernesto Pernia is also optimistic the government will sustain economic growth this year.

"Given this growth in 2016, we believe that the target of 6.5 percent to 7.5 percent for 2017 is highly likely. In the medium-term, we expect growth to strengthen further towards 7 percent to 8 percent," Pernia said at a press conference on Wednesday.

He added "the economy will expand by 50 percent in real terms, and per capita income will rise by over 40 percent" in the next six years.

Pernia attributed the economy's good performance to domestic demand, particularly in terms of investment and consumption. 

He said the Philippines is now shifting towards an industry-based economy, from a services-based one.

Both Dominguez and Pernia said the government hopes to turn the Philippines into an upper middle-income country by 2022.

Pernia said this would mean lifting about six million Filipinos out of poverty.

Possible risks

"The government will remain steadfast in its work, making sure that economic growth is built on people-centered and people-powered policies, stable macroeconomic fundamentals, and strong partnerships with other countries," Pernia said.

But Pernia also warned against possible risks to economic growth.

Chief among them are extreme weather disturbances, such as El Nino and typhoons. Hence, the government needs to bolster the country's agriculture sector.

Pernia said the economy may be vulnerable to "possible policy shifts in the U.S., greater volatility in capital flows, and geopolitical risks."