WV ECONOMY NEARS P1-TRILLION THRESHOLD: Pandemic seen to wipe out gains, but optimism remains

By Francis Allan L. Angelo

 

Western Visayas’s regional economy grew by almost 2 percent from 2018 to 2019 on the back of a robust services industry.

Data presented by the Philippine Statistics Authority-Regional Statistical Services Office (PSA-RSSO)-6 on Monday indicated that Region 6 grew from 4.8 percent in 2018 to 6.4 percent last year.

The growth brought Western Visayas’s economy nearer to the P1-trillion threshold at P915.3 billion, up from P860.1 billion in 2018.

In 2017, the region’s economy was valued at P820.8 billion.

The values were pegged at constant 2018 prices as part of the revised and rebased estimates of national and local economic accounts by the PSA.

The economic performance was measured in terms of the gross regional domestic product or GRDP (sum of the value of products and services in an area at a given period) and gross regional domestic expenditure or GRDE (spending of residents of the region in the domestic territory plus their expenditures in other regions including the rest of the world).

As expected, the services sector boosted the regional economy before the COVID-19 pandemic after accounting for 62.1 percent of the region’s economy and posting the fastest growth at 8.2 percent. It also accounted for 5 percent of the region’s 6.4 GRDP growth.

But with the pandemic forcing the region and the rest of the world to a grinding halt in 2020, the services sector (which includes tourism) will surely suffer a significant drop this year.

The industry sector (manufacturing, mining and quarrying, construction, and electricity, steam, water, and waste management) accounted for 21 percent of the regional economy in 2019 and pitched in 1.3 percent to the GRDP growth.

The agriculture, forestry and fishing industry posted a 0.5 percent growth in 2019 and accounted for 16.9 percent of the regional economy while its share to the regional GDP growth is at 0.1 percent. The figure indicates the continuous shift of the region from agricultural to a more services-oriented economy.

The PSA data also indicated that the top five largest sub-industries in Western Visayas in 2019 were:

1. Trade (18.1%)
2. Agriculture, Forestry and Fisheries (16.9%)
3. Manufacturing (10.4%)
4. Transportation and Storage (8.2%)
5. Financial and Insurance Activities (6.4%)

The accommodation and food services activities (hotels and restaurants) posted the fastest growth at 31.4 percent.

 

SPENDING DATA

Before, economic performance was based on production. But in the 2019 dataset, PSA also presented the expenditure or spending trends of the population and sectors.

The expenditure categories include Household final consumption expenditure, Government final consumption expenditure, Gross capital formation, Exports of goods and services to Rest of the World, Imports of goods and services from Rest of the World, and Net exports of goods and services to Rest of the Philippines.

In terms of expenditure, Household Final Consumption Expenditure (the value of expenditure on goods and services by resident households for direct consumption) had the largest share in the 2019 GRDE at 90 percent.

Gross Capital Formation or GCF posted the fastest growth at 9.8 percent.

The GCF refers to investments put in place and measured by the total value of fixed assets/capital formation, changes in inventories and acquisitions less disposals of valuables. An example would be investments of a farmer in machineries that he uses in farming, or chickens acquired by a poultry raiser. The values are pegged to the 2018 prices.

Except for imports of goods and services from the rest of the world which decelerated to -7.4, all other expenditure items grew in 2019.

-Household final consumption expenditure, 5.4

-Government final consumption expenditure, 8

-Gross capital formation, 9.8

-Exports of goods and services to Rest of the World, 4.4

-Net exports of goods and services to Rest of the Philippines, 8.1

Apart from the 90 percent share of household final consumption expenditure, Gross Capital Formation (18.7), Government final consumption expenditure (12.5), Exports to Rest of the World (7.7), and Imports from Rest of the World (17.3) also lifted the regional economy in the expenditure side last year.

Net Exports to the Rest of the Philippines, however, suffered a -11.6 slide in 2019.

As expected, Household final consumption expenditure, Gross Capital Formation, and Government final consumption expenditure were the top contributors to Western Visayas economic growth.

Net exports, on the other hand, slumped by -1.3 percent.

The per capita GRDP/GRDE (production and spending per head) in the region also grew by 5.4 percent, from P110,783 in 2018 to P116,803 in 2019 (at constant 2018 prices).

In 2017, the Per Capita GRDP/GRDE was at P106,750.

 

PERFORMANCE VIS-À-VIS OTHER REGIONS

At the national level, Western Visayas is the fifth largest regional economy after Bicol Region (7.4), the National Capital Region (7.2), Region I or Ilocos Region (6.9), and Region II or Cagayan Valley (6.7).

Region 6 bested the national growth rate of 6 percent and Central Visayas’s 5.9 percent.

Overall, Region 6 contributed 4.7 percent to the national economy.

 

CONFIDENT

National Economic and Development Authority (NEDA)-6 regional director Ro-Ann Bacal told Daily Guardian that they are “cautiously optimistic” that the region will be able to rebound from the onslaught of COVID-19 on the economy.

Citing the projected -2 percent contraction in the national economy this year, Bacal said they already expected Western Visayas to reel from the effects of the pandemic.

She cited latest figures from the Department of Labor and Employment to highlight the effects of the pandemic.

Since the health crisis broke out, DOLE reported that 429 establishment were affected, including 334 that temporarily closed and displaced 2,643 workers.

On the other hand, 85 establishments shut down for good, affecting 727 workers.

Bacal said they are optimistic that the region will rebound once businesses regain their confidence to fully operate amid the pandemic.

She cited that since the region is buoyed by the services sector and household spending, the priority is for people to get back to work and have money in their pockets.

“Once people go back to work and have money in their pockets, we will slowly but surely recover. Of course, we have to observe health protocols so we can gradually regain our confidence,” Bacal said.

The top NEDA official in the region said the looming availability of the COVID vaccine also buoyed the global optimism on economic recovery starting next year.

“As of now, we have to improve our transportation and government can offer help to our businesses who want to gradually recover from this crisis. While we are still in the middle of the pandemic, they can customize their businesses in keeping with current health protocols. Government can easily assist micro, small, and medium enterprises and other businesses to be more confident on our way to recovery,” she added.