NSCB - Fourth Quarter 2005 National Accounts - Press Release

Buoyed by the favorable performances of all the three major sectors, the domestic economy regained strength as the Gross Domestic Product (GDP) accelerated to 6.1 percent, from 5.3 percent in the same quarter in 2004. The vigorous growth in the Net Factor Income Abroad (NFIA) by 20.0 percent, mostly coming from the compensation of the country’s OFWs, pushed Gross National Product (GNP) growth from 5.5 percent in 2004 to 7.0 percent, the highest recorded growth since the second quarter of last year.

The economy regained the growth momentum that got derailed during the third quarter as the seasonally adjusted estimates of the Gross Domestic Product and Gross National Product accelerated to 2.7 percent and 3.0 percent, respectively, during the fourth quarter of 2005. 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.

GDP growth benefited from the accelerated performance of Services, the strong growth of Industry as well as the recovery of Agriculture. Services accelerated to 6.7 percent from 5.9 percent; while Industry posted a lower growth of 6.5 percent compared to the record growth of 7.2 percent last year. Agriculture, Fishery and Forestry, posted the lowest growth among the three major sectors at 4.0 percent but up from 1.2 percent.

Services, with a share of 46.8 percent of total GDP, contributed the most to GDP growth with 3.11 percentage points. Leading the sector’s growth were Trade, Finance and Transport, Communication and Storage

Industry accounted for 32.6 percent of GDP and contributed 2.1 percentage points to total GDP growth, its highest during the four quarters of the year. However, except for Mining and Quarrying, all subsectors decelerated from the record growths posted during the fourth quarter last year.

Agriculture, Fishery and Forestry, which accounted for 20.6 percent of total GDP, contributed 0.84-percentage point to the total GDP growth. Top contributors to growth were Fishery, Palay, Other Crops, Banana and Livestock. However, Corn and Forestry pulled down growth during the quarter.

The seasonally adjusted Agriculture, Fishery and Forestry sector grew by 0.8 percent in the fourth quarter, much slower than the 3.5 percent of the previous quarter. Palay, Banana, Fishery and Livestock production contributed to the growth of the sector. After a contraction in the third quarter of 2005, the seasonally adjusted Industry sector made a significant turn around of 4.9 percent in the fourth quarter as Manufacturing sustained its growth, Mining and Quarrying expanded mightily and the government channeled higher investments in Public Construction. The seasonally adjusted Services sector, likewise grew faster at 1.9 percent during the fourth quarter of 2005 from 0.7 percent. Finance continued to post double-digit growth while the other sub-sectors posted higher year-on-year growths during the fourth quarter compared to the third quarter.

In the Net Factor Income from Abroad, Compensation Inflow soared to 15.5 percent from 4.9 percent. The 13.4 percent growth in Property Income combined with only a 7.3 percent growth of Property Expense translated to the hefty growth in NFIA of 20.0 percent from 8.7 percent.

With the positive gains achieved in the fourth quarter, the per capita GDP grew by 3.9 percent from 3.2 percent. Similarly, per capita GNP rose to 4.8 percent from 3.4 percent. Per capita PCE, however, slowed down to 3.1 percent from 3.6 percent as increases in prices tempered consumer spending.

Despite the upsurge in remittances of the country’s OFWs, the continued hike in the prices of goods and services set back consumer spending in the fourth quarter, as PCE grew at a slower pace of 5.2 percent from 5.7 percent. Decreased expenditures were reflected in Fuel, light and water, Household furnishings and Beverages while Transportation and Communication, and Miscellaneous expenditures recorded lower growths. Only Clothing and Footwear and Household operations showed increased expenditures while Food expenditure maintained its growth in the previous year.

Investments in Fixed Capital Formation slipped to 1.4 percent from a growth of 4.3 percent, as a result of the substantial decline in Durable Equipment. With the sustained fiscal discipline enforced by the government, Government Consumption Expenditure (GCE) declined by 4.2 percent from a growth of 5.6 percent last year.

Total Merchandise Exports declined for the first time in four years by 0.5 percent from a growth of 10.5 percent. Total Principal Merchandise Exports grew by only 1.8 percent from 22.4 percent while the Monetization of gold shrank by 14.3 percent from a high 120.3 percent. Top Merchandise Exports were Finished electrical machineries, Banana and plantains, Garments, Iron agglomerates, and Copper concentrates. Meanwhile, Exports of Non-Factor Services slowed down to 6.1 percent from a higher growth of 15.6 percent.

Total Merchandise Imports recorded a decelerated growth of 1.0 percent from 6.5 percent. Growth came from “Others,” which rose to 8.9 percent from 21.2 percent and Imports on Consignment, which bounced back to 6.1 percent from a negative growth of 9.9 percent. Top Merchandise Imports were Transport Equipment, Electrical machinery, apparatus and appliances, Cereals and cereal products, Textile yarns, and Machinery other than electrical machinery. Imports of Non-Factor Services, on the other hand, grew by 3.8 percent from a negative growth of 4.2 percent.

GNP Implicit Price Index (IPIN) stood at 455.3 percent from 432.0 percent in the previous year or a 5.39 percent growth from 2004.

ROMULO A. VIROLA
Secretary-General, NSCB

Highlights of the 4th Quarter 2005 National Accounts

Time Series Tables

Glossary of Statistical Terms on Economic Accounts