By Jochebed B. Gonzales
Senior Researcher

THE ECONOMY of the Cordillera Administrative Region (CAR) grew the fastest among the 17 Philippine regions in 2017, though the National Capital Region (NCR) — or Metro Manila — still has the biggest share in the country’s output.
Preliminary results from the Philippine Statistics Authority (PSA) showed growth in CAR — which includes Baguio City and the provinces of Abra, Apayao, Benguet, Ifugao, Kalinga, and Mountain Province — picking up to 12.1% annually from 2.3% in 2016. This outpaced NCR’s 6.1% and the national growth rate of 6.7%.
Lifting CAR’s growth last year was the industry sector, which saw an 18.6% growth in 2017. This was a reversal of the 0.3% contraction posted in 2016. The sector was also the region’s predominant source of output, accounting for 52.1% of its gross regional domestic product (GRDP).
Union Bank of the Philippines (UnionBank) chief economist Ruben Carlo O. Asuncion cited infrastructure development as the driver of CAR’s double-digit growth last year.
“Current trends indicate that real estate developments are growing in non-traditional economic centers,” Mr. Asuncion said.
“Incidentally, CAR and Central Luzon are hosts [of] recent game-changing infrastructure [projects] like the SCTEX (Subic-Clark-Tarlac Expressway), NLEX (North Luzon Expressway), and TPLEX (Tarlac-Pangasinan-La Union Expressway), which I believe, have direct impact on local economic activities,” he added.
Among the industry subsectors, construction in CAR grew 23.6%, a turnaround from the 26.4% contraction in 2016. Manufacturing growth accelerated to 19.5% from the year earlier 3.8%.
Aside from CAR, seven other regions posted growth above the national average, namely Davao Region (10.9%); Central Luzon (9.3%); Western Visayas (8.4%); SOCCSKSARGEN (8.2%); Autonomous Region in Muslim Mindanao (ARMM, 7.3%); Cagayan Valley (7.2%); and Calabarzon (6.7%).

On the other hand, Eastern Visayas, which was the fastest growing region with 12% in 2016, had the slowest growth recorded in 2017 at 1.8%. Other regions that had below-average growth include Zamboanga Peninsula (2.3%); CARAGA (4.3%); Bicol Region (5.1%); Central Visayas (5.1%); Ilocos Region (5.8%); Northern Mindanao (5.9%); NCR (6.1%); and MIMAROPA (6.2%).
Still, Metro Manila remained the biggest contributor to economic growth last year even as expansion eased. NCR’s share in the national economy slightly dipped to 36.4% from 2016’s 36.6%, followed by Calabarzon (16.8%) and Central Luzon (9.7%), the locations of the country’s biggest firms and industrial zones.
Dragging NCR’s output was construction, which worsened to a 16.1% decline in 2017 from the 3.5% drop posted the year earlier.
“The slowdown [in the NCR’s construction output was due to] the drop in private construction spending… from approved construction permits,” said Paciano B. Dizon, officer-in-charge regional director for the PSA’s NCR office in a press conference yesterday.
UnionBank’s Mr. Asuncion attributed Metro Manila’s construction decline last year to the Duterte administration’s goal of redistributing growth to other regions, among others.
“The priority of decentralizing economic growth may have caused this decrease of private construction GVA (gross value added). But, it must also be noted that this private construction decline has been a marked trend more recently,” said Mr. Asuncion.
“It may also be because that real estate developers are now more focused outside of the usual economic centers where economic potential have initially originated.”
Meanwhile, other economists pointed to the rising prices of construction materials.
“The growth slowdown in NCR’s private construction may have been influenced by the increase in prices of construction materials amid stronger inflationary pressures,” said Security Bank Corp. economist Angelo B. Taningco.
Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines (LANDBANK), shared the same opinion. “Rising interest rates and commodity prices could be the reasons behind the slowdown in private construction. These two trends raised the cost of construction, tempering the sector’s output growth.”
NCR also led all regions in terms of per capita GRDP with P244,453, growing 5% and higher than the national average of P82,592. Calabarzon and CAR likewise topped the national average at P99,328 and P83,044, respectively. On the other hand, ARMM had the lowest GRDP per capita last year at P13,989.
Also worth noting is that among the regions, only Eastern Visayas recorded a drop in GRDP per capita (-0.1%) last year to P37,125.
Looking forward, UnionBank’s Mr. Asuncion expects NCR to still be the main source of economic growth although other regions “are slowly and surely catching up.”
“In the next coming quarters, I expect the private construction GVA trend to continue with other regions taking up the slowdown,” the economist said.
For Security Bank’s Mr. Taningco, “I expect growth of select regions outside NCR… to continue its relatively fast growth over the medium term as I see the current administration’s priority [to] promote more inclusive growth via regional development. I believe that such trend will help reduce the economy’s dependence on NCR and narrow income inequality.”
LANDBANK’s Mr. Dumalagan concurred: “We could expect faster rates of growth in other regions given the administration’s thrust to invest more outside of NCR. The government’s plan to build bridges and roads in the Visayas and Mindanao could improve connectivity and promote economic activity in these two island groups.”