2014

 

The Philippine economy performed creditably in 2014. Although it missed the government’s growth target of 6.5% to 7.5% for the year, advancing 6.1% in GDP after a fourth quarter rally, it has remained to be the fastest growing economy in the ASEAN Region and the second best performer in the Asian economies after China’s 7.4%. 

 

Services and Industry again drove economic expansion accounting for 57% and 33% of the country’s GDP, respectively. Services grew 6.0% buoyed by the robust performance of Real Estate, Financial Intermediation, Transportation, and Trade. These sectors grew by at least 6% with Real Estate leading the way rising by 8.1%.  Industry outpaced Services two years in a row as it registered a growth of 7.5% after the impressive performances of both Manufacturing and Construction which rose by 8.1% and 8.5%, respectively.

 

On the demand side, Household Consumption that accounts for almost 70% of the country’s GDP continued to fuel economic expansion. The OFW money remittances placed at USD 27.0 Billion and the Business Process Outsourcing (BPO) industry that has produced about USD18.0 Billion in revenues and employs more than one million Filipinos supported higher domestic consumption and private construction. With the Supreme Court’s declaration that the Disbursement Acceleration Program (DAP) as unconstitutional, Government Spending was held back rising only by 1.8%.  Capital formation likewise barely grew by 1.1%.

 

On the balance of trade, the country posted a trade surplus of about P31 Billion as Exports rose by 12.1% while Imports grew only by 1.1%.  On the capital market, the Philippine Stock Exchange (PSE) performed quite as well as the index closed at 7,230.57 points or almost 23% higher than the close of 2013. Interest Rates on T-bills improved more than twofold on the average but the time deposit rates went down by 23.0%. Headline Inflation, on the other hand, inched up to 4.1% - still at single digit but a deterioration nonetheless from only 3.0% the previous year.  Notably, in May 2014, Standard & Poor’s upgraded the credit rating of the country from BBB- to BBB.

 

Nature had been kinder to the non-life industry in 2014. From 25 recorded typhoons and tropical storms the previous year, one of which was “Yolanda”, the super typhoon that had brought so much devastation to life and property, the country was visited only by 15 of them and they were not as strong.  There were also incidents of flooding but there were no major earthquakes during the year. Consequently by these alone, it is expected that the technical results of the industry once collated would outshine the results of the previous year.

 

On the regulatory side, the Insurance Commission, drawing power from newly revised Insurance Code and having obtained fiscal autonomy, raised its regulatory fees and monetary penalties.  The stiff fines would have deterred the aggressive players from breaching tariff rates. Unfortunately, as competition continued to intensify, breaching of rates remained unabated. Again, companies that respect the tariff and practice good governance were placed in a position of disadvantage.