Where higher growth can come from

The country’s GDP growth of 4% in the third quarter (Q3) was low by recent Philippines growth standards, although modest to high by global growth trends. The causes for such low growth are generally understood, especially the ongoing corruption scandals and the series of strong and damaging storms. The big question now in the minds of many people is: Can we sustain growth of 5.5% or higher, and when?

- BIENVENIDO S. OPLAS, JR.

I asked myself that question too, so I devised ways and metrics to help answer it. First, I wanted to know what sectors the largest contributors to GDP are, and their share of the total. Second, I wanted to know their growth performance in recent years and this year. Third, I will be making some proposals on certain growth drivers that can be prioritized.

Gross Domestic Product (GDP) is measured in two ways, the demand side via consumption expenditure, and the supply side via industrial or sectoral origins.

On the demand side, the largest component is household and corporate consumption at 72% of GDP, followed by investment or gross capital formation (including construction) at 23% of GDP. Government consumption (excluding construction) is around 15% of GDP.

On the supply side, the largest contributors are the services sector at 63% of GDP, particularly the sub-sectors wholesale and retail trade plus repair of vehicles at 29% of GDP, and finance-insurance activities at 11% of GDP. ‘The second largest contributor is industry at 29% of GDP, with the manufacturing sub-sector making up 18% of GDP.