NEDA: Construction accounts should be adjusted upwards
The Philippine Statistics Authority 10 has clarified that although the regional economy of Northern Mindanao grew at a slower rate in 2017 compared to the previous year, it doesn’t mean the economy in the region has dipped.
In fact, due to the present methodology used by government to monitor construction goods and services, the actual figure for the subsector may have to be adjusted upwards to reflect the reality on the ground, the National Economic and Development Authority Region 10 office said.
Northern Mindanao Region’s Economy grew by 5.9 percent
PSA figures show the 5.9 percent growth rate for 2017 was at a pace slower than in 2016 due to slower growth in the construction and trade subsectors, offsetting gains in agriculture; electricity, gas and water supply; and the transport, communication and storage sub-sectors, among others.
PSA-X figures showed the services sector contributed 2.8 percentage points to the total Gross Regional Domestic Product (GRDP) growth; industry sector, 2.1 percentage points; and agriculture sector, 1.0 percentage point.
GRDP, Region X at Constant 2000 Prices, in billion pesos
The services sector remained the biggest contributor to the GRDP, accounting for 43.4 percent of the region’s total output worth P 323 billion at constant 2000 prices.
“Pag negative contraction ang tawag niyan. When we estimate economic performance, when we say growth, it is still positive even it is at a slower rate, “said Ronaldo C. Tagap, regional director of the Philippine Statistics Authority 10 in the sidelines of the news conference which presented the 2017 Report on the Economic Performance of Northern Mindanao held April 26 at a local restaurant.
However, Taghap noted a silver lining in the way Northern Mindanao’s economy is made.
“I have noted that our region, compared to others, we have a balanced share between the agriculture, industry and service sectors. The advantage to this is it means the economy is more diversified, and if it’s is more diversified, it means the regional economy is more resilient to extreme swings of growth and contraction. You have a problem if you have a sector which is significantly bigger than the others, and once it fails, you have a big problem.”
Slowdown expected
NEDA-X Director Leon M. Dacanay, Jr. said that the slowdown was expected in a post-election year but was well within the target range of 5.1-6.7 percent for 2017.
However, Dacanay noted the steep decline in trade (from 10.4 percent in 2016 to 5.9 percent growths in 2017) may have been flatter, or growth could have picked-up, given trade and customs data from official sources showing substantial increases.
Construction sub-sector
He also expressed his reservations on the steep decline in the construction sub-sector citing huge private investments in infrastructure and related activities as monitored by the Department of Trade and Industry (DTI-X).
“All sectors, except trading and construction declined. The biggest decline is construction. From a high of 27.7 it went down to only 2.2 percent. Despite many projects in the region starting in 2017, they were not included because the present methodology only accounts for the value of completed projects,” Dacanay noted.
“Most of projects monitored by PSA for GRDP 2017 are government projects under Build! Build! Build! But we noted the private construction hindi nila na account because the methodology only accounts for a project once it is completed so some of them may be accounted only much later by maybe 2020,” “It’s a weakness in the methodology which has not yet been rectified, and also has to be applied nationwide.”
Construction Indicators (Supporting Growth for 2017)
“The total worth of the construction goods and services in 2015 was P22-Billion. It increased to P28.1-Billion in 2016, a P6-B increase,” Taghap said. “But in 2017, we monitored only 28.7 meaning there was still a P600-million in construction. Despite this, this still means an additional P600 million was injected into the economy of Region 10. That’s still a big factor despite the slower growth. We are hopeful construction picks up next year considering the many infrastructure projects promised to us by the national government.”
Build! Build! Build!
Despite Taghap’s optimism, Dacanay remains cautious. “If you look at construction two percent lang ang increase. If you realize more than 10 percent it will translate into more projects. Kaya ang problema natin sa Build, Build, Build, if we have more projects, do you have the manpower to do that?
“If you increase the number of projects, you need more contractors, you need more manpower. Ang nakikita naming, dapat umuwi mga OFW kasi iyong construction workers natin nasa abroad. As we have more projects, more opportunities for employment, it’s a come on for OFWs to come home.”
Dacanay has requested the PSA to review the estimates for these sub-sectors to have a firmer assessment of the region’s economic performance.
GRDP Region-X Growth (in percent), 2012 to 2017
“Nevertheless, I must say again that the region is on track in meeting its growth targets. We look forward to a more bullish year as we move to hit our 2018 target band of 5.5-7.1 percent, and shift to a higher growth trajectory”, he said.
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