NSCB - 4th Quarter 2006 National Accounts - Press Release

Driven by the steady performance of Trade and Manufacturing, and aided by the resurgence of TCS and Private Services, the Gross Domestic Product (GDP) grew by 4.8 percent in the fourth quarter of 2006. The domestic economy however, suffered from three typhoons and failed to sustain its growth during the last four quarters. On the demand side, increased household spending and Merchandise Exports were the major drivers of growth. The continued vibrant growth in the Net Factor Income from Abroad (NFIA) at 18.3 percent pushed the Gross National Product (GNP) to a 5.9 percent growth, albeit lower than the 6.9 percent growth in the same quarter last year.

Sustaining its gain from the previous quarter, the seasonally adjusted estimate of the Gross Domestic Product posted a steady 0.8 percent growth in the fourth quarter of 2006. The vigorous growth of the Net Factor Income from Abroad, which is the second highest during the last eleven quarters, boosted the stable GDP growth as the seasonally adjusted Gross National Product zoomed to a 4.4 percent growth, from a contraction of 0.6 percent in the previous quarter. The growth of the seasonally adjusted GNP was the highest during the last twelve years.

In the fourth quarter, GDP growth was driven by the famously resilient Services sector, which strengthened its growth to 7.0 percent from 6.4 percent, offsetting the slowdown in Industry which grew by 3.3 percent from 4.9 percent; and the deceleration in Agriculture, Fishery and Forestry, from 3.7 percent to 1.9 percent.

Services, with a share of 48.0 percent of total GDP, contributed the most to GDP growth with 3.3 percentage points. Leading the sector’s growth were Trade, Transportation, Communication and Storage and Private Services.

Industry accounted for 31.6 percent of GDP and contributed 1.1 percentage points to total GDP growth, led by Manufacturing. It did not, however, grow as fast as in recent quarters.

Agriculture, Fishery and Forestry, which accounted for 20.4 percent of total GDP, decelerated to a 1.9 percent growth from 3.7 percent last year, contributing 0.4 percentage point to the total GDP growth. Biggest contributors to growth were Forestry, Corn, Banana, Sugarcane and Agricultural Activities & Services.

The seasonally adjusted Agriculture, Fishery and Forestry sector continued to plunge as it registered its worst performance since the second quarter of 2004, contracting by 1.6 percent in the current quarter. The improved growth of Corn and Sugarcane failed to curb the decline in Palay and Livestock and the slowdown of other agricultural products. AFF has contracted in three of the last four quarters. The revised growth of 0.2 percent of Industry in the third quarter was sustained through the fourth quarter of 2006, but still a far cry from the second quarter growth of 2.7 percent. The record growth of Electricity and Water and the turn around in Construction kept industry barely in positive territory amidst the underperforming Mining and Quarrying sector. The Services Sector continued its steady rise as it registered a hefty growth of 2.2 percent in the fourth quarter of 2006, from 0.7 percent and 1.6 percent during the 2nd and 3rd quarters, respectively. The biggest contributors to the acceleration of the sector are Trade, Transportation, Communication and Storage and Private Services.

The expansion of the economy continued to keep pace with the population growth in the fourth quarter: per capita GDP grew by 2.7 percent from 3.2 percent in the previous year and per capita GNP increased by 3.8 percent from 4.8 percent. Per capita PCE accelerated to 3.6 percent from 2.9 percent.

The sustained growth in the stock of OFWs particularly in the last six quarters resulted in the growth of 14.2 percent in compensation inflow from 6.0 percent last year. This, together with the combined effect of the significant growth in Property income by 25.0 percent and the minimal growth Property expense of 5.3 percent led to the sustained double-digit growth of NFIA that started in the fourth quarter last year.

On the expenditure side, consumer spending expanded by 5.6 percent in the fourth quarter of 2006 from 5.0 percent a year ago fueled by the continued hike in remittances of Overseas Filipino Workers (OFWs). Expenditures on Food and Miscellaneous increased while expenditures on Transportation/Communication and Household Operations decreased.

After moderate increases during the two preceding quarters, Government Consumption Expenditure (GCE) accelerated to 9.3 percent in the fourth quarter from a growth of 1.1 percent last year.

Investments in Fixed Capital Formation rebound to 2.0 percent from negative 4.6 percent, posting increases in all of its sub-sectors.

The country’s Total Merchandise Exports accelerated to 8.7 percent from 5.1 percent, backed up by the upsurges in Garments, Gold from Copper, and Cathodes & Sections of Cathodes of Refined Copper. On the other hand, Exports of Non-Factor Services slipped to 1.0 percent in the fourth quarter of 2006 from 12.9 percent a year ago as most of its sub-sectors recorded lower growths.

Total Merchandise Imports expands to 3.1 percent from 1.3 percent last year. Growth was driven by the increases in Others and Imports on Consignment. Meanwhile, Imports of Non-Factor Services accelerated to 19.4 percent from 3.8 percent a year ago, as most of its sub-sectors posted gains during the quarter.

During the quarter, the terms of trade posted a favorable Trade Index of 107.2 percent. Trading Gains during the quarter amounted to P10.9 billion pesos as the IPIN of exports exceeded the IPIN of imports, 483.33 and 450.90, respectively.

GNP Implicit Price Index (IPIN) stood at 477.16 percent from 457.54 percent or a 4.3 percent growth from 2005.

ROMULO A. VIROLA
Secretary-General, NSCB

(l-r, NSCB-ESO Director Raymundo J. Talento, NSCB Secretary General Dr. Dromulo A. Virola, Secretary of Socio-Economic Planning and Chair of the NSCB Board Mr. Romulo L. Neri and NEDA-NPPS Director Dennis Arroyo)

Media covering the Press Conference

Highlights of the 4th Quarter 2006 National Accounts

Time Series Tables

Glossary of Statistical Terms on Economic Accounts