Brief Performance of the Bicol Economy in 2018

Bicol region managed to grow in 2018 despite the occurrence of calamities, weather disturbances, and economic uncertainties such as rising prices of goods and services and depreciation of the peso. The growth of the economy was demonstrated in the increased and sustained improvement in agriculture, industry, and services sectors.

The production output of major agricultural crops from January to September 2018 increased compared to the same period last year. Palay production grew by 1.36 percent from 859,216 metric tons (MT) in 2017 to 870,912 MT in 2018. This was attributed to the planting of high quality rice seeds, farm mechanization, and sufficient water supply from newly constructed or rehabilitated irrigation facilities. Coconut crops recovered from the destruction brought by Typhoon Nina in 2016 resulting to increased production of 11.9 percent from 754,255 MT in 2017 to 843,944 MT in 2018. Production of abaca fiber increased by 8.16 percent. This could be attributed to the high-yielding and virus-resistant abaca suckers that were planted, modern technology, utilization of specialized farm equipment, and the continuous rehabilitation of 15,034 hectares abaca areas in Catanduanes that were damaged by Typhoon Nina. Among major crops, only corn production declined by 5.35 percent from 238,891 MT to 226,099 MT. Fish production managed to increase by 5.68 percent notwithstanding the decrease in the commercial and municipal fishing by 3.74 percent and 3.39 percent, respectively. Hog production showed positive growth rate of 2.55 percent, chicken at 1.41 percent, and cattle at 1.85 percent. The increased livestock production was attributed to the distributed semen straws which infused genetically superior breed of animals, the drugs and biologics for disease control and trainings on intensified livestock production provided by the Department of Agriculture. Production costs however increased due to the rising prices of fuel and other production inputs.

The mining industry performed well during the year. Despite low production of metallic and non-metallic minerals, the taxes paid by large-scale mining companies amounted to PhP2.013 Billion, higher by 54 percent compared to the PhP1.307 Billion taxes paid in 2017. Of these taxes, 99.32 percent came from mining companies of gold and silver while 0.68 percent from mining companies of non-metallic minerals. The gold and silver minerals produced by Filminera Resources Corporation in Aroroy, Masbate decreased by 0.06 percent and 31.57 percent, respectively. Production of non-metallic minerals such as perlite and low grade perlite declined by 47 percent and 88 percent, respectively. Limestone mineral produced increased from 4,134 metric tons in 2017 to 45,486 metric tons in 2018. The establishment of Minahang Bayan or People’s Small Scale Mining Area in the province of Masbate addressed the proliferation of small scale mining operations wherein a designated area for mining activities was provided to small scale miners.

Tourism remained as a major economic driver of the region. The sustained growth in tourism was attributed to the holding of festivals, hosting of national events and conventions, establishment of new tourism facilities and support services, and aggressive tourism promotion and marketing activities. Based on preliminary data from the Department of Tourism, there were 1.8 million tourists in 2018. There was no data yet from Camarines Sur province and Naga City. During the first quarter of the year, more tourists came to the region to witness Mayon Volcano’s abnormal activities. The demand for land travel went up due to flight cancellations or temporary closure of air traffic due to the eruption of Mayon Volcano. The construction and improvement of access roads connecting the service centers with the tourism sites through the Tourism Road Infrastructure Program (TRIP) of the Department of Tourism-Department of Public Works and Highways convergence largely contributed in the growth of tourism industry. The TRIP paved way to the opening of new tourist destinations which have encouraged tourists to stay longer in the region.

The services sector remained as the biggest contributor to the economy. Education services improved due to the implementation of the Universal Access to Quality Tertiary Education Act which started in school year 2018 to 2019. The government provided fund to cover the cost of tuition fees of students enrolled in state universities and colleges, local universities and colleges, and technical-vocation education and training programs. Government services which contributed in the improvement of the sector include the continued implementation of social welfare programs, such as Pantawid Pamilyang Pilipino Program or 4Ps, K to 12 Program and Expanded Student’s Grant-in-Aid Program for poverty alleviation. The newly opened commercial establishments of private firms, such as hotels, restaurants, malls, hotels, resorts, and convenience stores also contributed in the growth of the services sector since it created jobs, increased incomes, and strengthened the investment climate.

Bicol region’s labor market expanded in 2018. On the supply side, the Annual Labor and Employment Estimates for 2018 recorded a labor force participation rate of 60.9 percent (equivalent to 2.5 million persons) which was higher by 0.8 percentage point (equivalent to around 89,000 persons) compared to that of 2017. The expanded labor market was attributed to the new college and senior high school graduates for the school year 2017 to 2018. On the demand side, employment rate in 2018 was 95.1 percent, lower by 0.3 percentage point compared to the previous year. In terms of number, there were 2.38 million employed persons in 2018 compared to 2.30 million in 2017. The increase in the number of employed persons was attributed to the jobs created by the opening of new malls, hotels, and other commercial establishments in the various cities and urban municipalities in the region. On the other hand, unemployment rate in 2018 rose from last year’s 4.6 percent to 4.9 percent or equivalent to 122,535 unemployed persons. The rise in the number of unemployed persons, from 110,408 in 2017, was due to lack of available jobs fitted to the educational qualifications of K-12 graduates. Based on the Department of Education’s report, there were 79,508 students who graduated in March under the K to 12 program. There is a need to review the qualification standards for employment of senior high school graduates in government to respond to the circumstances resulting from the newly implemented basic education system reform of the country. On the number of Bicolanos who sought for additional or new job with longer working hours, the region has the highest with 707,860 Bicolanos who desired to have good quality and high paying jobs in 2018. It has the highest underemployment rate among the 17 regions, including NCR and ARMM, at 29.6 percent, higher than that of 2017 by 2 percentage points. This high underemployment rate which the region consistently recorded for several years remains a challenge to address in the updating of the Bicol Regional Development Plan (RDP).

Prices of widely used commodities increased due to several factors such as the depreciation of Philippine Peso as against the US dollar, and increase in the price of oil in the world market. These factors contributed to the high production cost of goods and services that pushed inflation rate up to 3.1 percent in January 2018 from 1.6 percent in December 2017. Consumer Price Index (CPI) averaged at 118 in 2018, higher by 7.7 index points compared to the previous year. Inflation rate averaged at 6.9 percent in 2018 which was higher by 5.6 percentage points compared to the 1.3 percent average inflation rate in 2017. In 2018, more money was in circulation due to additional disposable income derived from the reduction in personal income tax of taxpayers, the effect of free college tuition, and the continued implementation of Unconditional Transfer (UCT) program. Under the UCT, poor households were provided with cash grants amounting to PhP2,400 per year. The UCT is one of the social mitigating measures under the TRAIN Law to help cushion the impact of inflation on the vulnerable sectors. Prime commodities were also monitored to ensure reasonable and affordable prices of goods. Fair consumer goods pricing was likewise enforced to protect the consumers and the Bangko Sentral ng Pilipinas continued to maintain price stability through implementation of monetary policies such as increasing interest rate of borrowings.

The recent economic history of Bicol shows that the region managed to grow despite setbacks and uncertainties. In the past four years, Bicol has been considered as one of the fastest growing regions in the country: 8.1 percent in 2013, 4.3 percent in 2014, 8.9 percent in 2015, and 5.5 percent in 2016. In 2017, the GRDP grew at a slightly lower pace of 5.1 percent from PhP164.06 Billion in 2016 to PhP172.36 Billion (at constant 2000 prices).

The decline in growth between 2016 and 2017 does not translate to a decreased GRDP. Rather, the economy expanded, albeit at a slower pace. As targeted in the Bicol RDP, the region will endeavour to sustain its growth through the implementation of development programs and projects by both the government and private sector partners.