NSCB - Third Quarter 2005 National Accounts - Press Release

The spiraling oil and consumer prices and the sluggish performance of the farm sector, exacerbated by political instability dampened economic growth in the third quarter of 2005 as the country’s Gross Domestic Product (GDP) decelerated to 4.1 percent, from 6.2 percent in 2004. This was boosted, however, by the hefty growth in Net Factor Income from Abroad (NFIA) by 38.7 percent, pushing the Gross National Product (GNP) upward to 6.5 percent, from 5.7 percent in the previous year.

The economy continued to bear the brunt of oil price increases as the seasonally adjusted GDP posted a lower growth of 0.5 percent in the third quarter of 2005 from 1.4 percent in the second quarter of 2005. Likewise, seasonally adjusted GNP slowed down to 1.7 percent from 2.3 percent in the previous quarter.

On the production side, the ever-resilient Services continued to drive the economy, but at a slower pace of 5.1 percent from 7.8 percent. Industry slightly picked up at 3.9 percent from 3.6 percent. GDP growth, however, was weighed down by the listless performance of Agriculture, Fishery and Forestry, which grew by only 1.8 percent from 7.3 percent.

Services, with a share of 48.1 percent of total GDP, contributed 2.40 percentage points to GDP growth. All sub-sectors of Services reported lower growths except Finance which accelerated to a double-digit growth.

Industry accounted for 34.3 percent of GDP and contributed 1.35 percentage points to total GDP growth. Manufacturing and Mining and Quarrying propelled the growth of Industry.

Agriculture, Fishery and Forestry, which comprised 17.5 percent of total GDP, contributed 0.32 percentage point to total GDP growth. Leading contributors to growth were Corn, Fishery, Livestock and Banana.

Seasonally adjusted AFF continued its recovery by posting a robust growth of 3.4 percent compared to the first two quarters of 2005. On the other hand, Industry contracted by 0.9 percent from a healthy growth of 2.2 percent in the second quarter. Services continued to grow at a slower pace at 0.5 percent growth from 1.1 percent in the second quarter. With the sustained performance of the AFF sector, the economy barely survived the adversities during the third quarter of the year and continued to show resiliency.

In the Net Factor Income from Abroad (NFIA), Compensation Inflow surged to 19.7 percent from the previous year’s growth of 5.1 percent due to higher earnings and increase in stock of our OFWs. The higher growth in Property Income at 19.7 percent and the decline in Property Expense by 6.2 percent translated to the substantial growth in Net Income Flow of 38.7 percent from negative 0.9 percent.

The continued slowdown in the economy translated to a marked reduction in per capita GDP by 2.0 percent from 4.1 percent. On the other hand, per capita GNP rose to 4.3 percent from 3.5 percent. Per capita PCE decelerated to 2.6 percent from 3.4 percent.

The continued hike in the prices of goods and services set back consumer spending. The upsurge in remittances of the country’s OFWs stirred up consumer spending but at a slower pace, with PCE growing at 4.8 percent from 5.5 percent. Cutbacks in expenditure were noted in Beverages, Clothing and footwear and Household furnishings. Other expenditure items posted decelerated growths as a result of higher prices: Food, Fuel, light and water, Transportation/Communication and Miscellaneous expenditures.

Investments in Fixed Capital Formation fell by 3.8 percent from a growth of 3.6 percent as investments in all its subsectors declined. Government Consumption Expenditure (GCE) posted a lower negative growth of 2.1 percent from negative 7.2 percent.

The country’s Total Merchandise Exports turned in a lower growth of 3.2 percent from 17.1 percent. Total Principal Merchandise Exports decelerated to 7.7 percent from 13.6 percent while Others (which includes electronic products that make up more than 50 percent of total merchandise exports), grew by 6.1 percent from 11.2 percent. Exports of Non-Factor Services increased by 10.3 from 12.8 percent as all its subsectors except Insurance posted gains.

Total Merchandise Imports was up by 8.2 from 6.1 percent, buoyed by Principal Merchandise Imports which rose to 10.0 percent from 2.7 percent; and “Others”, which grew by 4.4 percent from 15.2 percent. Imports of non-factor services decreased by 3.6 percent from 16.0 percent.

GNP Implicit Price Index (IPIN) stood at 451.3 percent, a 5.9 percent increase from 2004.

ESTRELLA V. DOMINGO
Assistant Secretary-General, NSCB

NSCB Assistant Secretary General Estrella V. Domingo announces the 3rd Quarter 2005 estimates of the National Accounts of the Philippines.
(l-r) NSCB ESO Director Ray Talento, Asst. Sec. General Estrella V. Domingo, NEDA Director General and Secretary of Socio-Economic Planning Augusto B. Santos and NEDA-NPPS Director Dennis M. Arroyo.

The Press covering the proceedings.

Highlights of the 3rd Quarter 2005 National Accounts

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