MANILA - Weak farm output and high oil prices capped Philippine economic growth at 5.1 percent in 2005, officials said yesterday, just below the government's target of 5.3 percent growth.

But the figure was better than most private sector forecasts of below five percent and President Gloria Arroyo's government expects GDP to meet its earlier forecast of between 5.7 and 6.3 percent growth this year, they added.

The agriculture sector, which employs nearly four in 10 Filipinos, "moderately expanded" by 2.0 percent last year due to the "tempered growth of crops, restrained growth of livestock and weak poultry growth," Economic Planning Secretary Augusto Santos told a news conference.

All sub-sectors in industry posted "remarkable growth" except for utilities, which suffered because of reductions in government spending to achieve its fiscal deficit target, he said.

Without the effects of El Nino dry spell, GDP growth last year would have been 5.7 percent and Santos said the dry spell tempered the performance of agricultural crops.

The key services sector rose 6.3 percent, while the industrial sector managed a 5.3 percent expansion. Manufacturing rose 5.6 percent, the highest since 2001.

"The economy regained the growth momentum that got derailed during the third quarter," Romulo Virola, secretary-general of the National Statistical Coordination Board, said.

"All major sectors contributed positively to the growth of the economy despite the persistent increases in oil and consumer prices and the political turmoil that continued to hound business and government," he added.

But growth needs to be sustained to a level where majority of the Philippine poor would actually benefit from it, he said. A continuing political crisis hounding the Arroyo presidency, higher oil prices and an uptick in inflation would continue to be key challenges to the economy this year.

The president survived an impeachment bid in Congress last year, but her popularity remains in the doldrums over allegations she cheated in the 2004 polls. Allies have deserted her and calls for her resignation continue.

Dennis Arroyo, policy director in the economic planning ministry, said a boom in the mining industry and huge revenues from a higher consumer tax could generate up to P77.5 billion in extra revenue this year.

Since the Supreme Court in December 2004 threw out a legal challenge on a law that liberalized the mining sector, 24 mining projects have generated $339.7 million in investments, creating some 5,000 jobs.

"We expect a mining boom and that war chest of P77 billion is a big factor," said Arroyo, who is not a relative of the president.

"Even critics of the economy say we are resilient. We are more than resilient, we are tough," he added.*AFP

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