Amidst the global and local uncertainties which prevailed during the year, the Philippine economy exhibited sustained growth in the year 2002, surpassing the government’s target of 4.5% for the entire year.

National Statistical Coordination Board (NSCB) estimates for 2002 showed the country’s Gross Domestic Product (GDP) growing by 4.6%, 1.4 percentage points higher than its 3.2% performance in 2001. The Gross National Product (GNP) likewise improved from a 3.4% growth in 2001 to 5.2% in 2002 as Net Factor from abroad accelerated to 15.5 % from its 7.2% growth last year. Per capita GDP and GNP registered better growth rates in 2002 with 2.4% and 3.0% , respectively, compared to 1.1% and 1.3%  gains in 2001.

The GDP for the fourth quarter rose by 5.8% from 3.9% a year ago. It was the highest growth of GDP since the third quarter of 1997. Meanwhile, the seasonally adjusted GDP (SAGDP) showed a quarter-to-quarter growth of 4.6%, also the highest recorded gain for the SAGDP in more than two decades.

Gross Domestic Product (GDP)
Annual Growth Rates: 2001-2002

The GDP growth was driven by the robust performance of Services, the upswing of the Industry sector and the resurgence of the Agriculture, Fishery and Forestry (AFF). All major industries of the three major sectors posted positive growths at the end of the year. The aggregate services sector contributed 2.5 percentage points to the growth of GDP as it further improved by 5.4% in 2002, outpacing its 4.4% growth in 2001. Trade and Transportation, Communication and Storage (TCS) led the growth of services, accelerating by 5.7% and 8.9%, respectively. Growth rate of finance more than doubled from 1.2% in 2001 to 3.2% while ownership of dwellings and real estate recovered from its negative performance last year, reflecting a positive 1.6% growth. Private and government services put in their share in the growth of the economy increasing by 5.5% and 4.6% respectively.

Similarly, industry surged to 4.1% from the 1.3% growth recorded last year, putting in 1.4 percentage points to the GDP growth. There was a notable 49.2% growth in mining and quarrying sector this year largely due to the increased production of natural gas from the Malampaya projects and the remarkable performance of gold mining. Manufacturing sector contributed 0.8 percentage points to the growth of the economy as it grew by 3.3%, 0.4 percentage higher than its 2.9% increase in 2001. The construction and utilities sectors likewise exhibited improved performances during the year with a zero and 2.1% growth compared to their –3.6% and 0.7% growth, respectively, in 2001.

With the recovery of Palay, the combined Agriculture, Fishery and Forestry (AFF) bounced back in the fourth quarter with a 6.1% gain, in contrast to its negative growth recorded in the third quarter of the year. This is the highest growth recorded for the AFF sector since Q1 2000.  As a result, AFF grew by 3.5% in 2002 from the 3.7% annual growth recorded in 2001. Major contributors to the growth of AFF are the sustained expansions in livestock (4.1%), poultry (6.2%) and fishery (6.4%).

Net Factor Income from Abroad (NFIA) accounts for about 6.5% of total GNP and contributed 0.9 percentage point to the 5.2% growth of GNP. It reported an annual growth of 15.5% and a fourth quarter increase of 31.3%, the highest recorded quarterly gain since Q1 of last year. 

On the expenditure side, significant improvements were observed for exports and imports of goods and services. Total exports and imports went up by 3.3% and 4.9%, respectively, reversing their –5.2% and –0.8% growth in 2001. Merchandise exports and imports started slowly this year as they recorded negative growths during the first quarter. However, they both recovered in the next three quarters of the year ending up with annual growths of 4.8% and 6.2%, respectively. Semiconductors (20.2%) and garments (4.4%) are the top contributors to the growth of merchandise exports while electrical machinery (25.1%) and machinery other than electrical (16.0%) led the recovery of imports. Substantial gain was also recorded for imports on consignment, which are mostly raw materials for electronics and semiconductor industry. It posted an annual growth of 30.2% and a fourth quarter increase of 71.3%, an all time high for the growth of imports of consigned goods.  While exports and imports of services still posted negative growths with –7.2% and –12.1%, respectively, they represent an improvement compared to their much bigger declines recorded last year.

Consumption expenditures contributed significantly to the improved performance of the economy. Personal Consumption Expenditure (PCE) sustained its growth for the entire year reflecting an annual increase of 3.9%. This translates to a 2.9 percentage points contribution to the 5.2% GNP growth. Expansion in consumer spending can be attributed to the increased expenditures on food, transportation and communication and miscellaneous services during the year. Per capita PCE grew by 1.7% compared to its 1.4% performance in 2001. Likewise, government consumption expenditure reported a higher growth of 1.8% from its 0.3% gain in 2001. 

Expenditures on investment also reported better growths in 2002 with fixed capital formation showing a turnaround growth of 2.1% from its 2.2% decline last year. Two of its major sectors, construction and durable equipment, recovered from their negative performances in 2001, posting a 2.4% and 1.4% growth, respectively. Breeding stocks and orchard development on the other hand recorded a decelerated growth, from 5.8% in 2001 to 4.4% in 2002.

PRESS CONFERENCE
on the 2002 Philippine Economy
30 January 2003, 10:30 am
National Statistical Coordination Board
Makati City, Philippines

(from left: Dir. Estrella V. Domingo, NSCB; Sec. Gen. Romulo A. Virola, NSCB; Sec. Romulo L. Neri, NEDA; Dir. Socorro Zingapan, NEDA; Dir. Benjamin Toriano, NEDA)