Economy grew at a record high of 6.9 percent in seventeen years

Low inflation, a strong peso, government’s pump priming activities and preparations for the elections during the first quarter of 2007, saw the GDP grow at a record high of 6.9 percent, the country’s highest since the first quarter of 1990.  The unexpectedly high GDP growth was backed by the strong performances of Trade, Manufacturing, Agriculture, Fishery and Forestry (AFF), Transportation, Communication and Storage (TCS), Finance and Private Services.  On the expenditure side, main growth drivers were higher household spending, exports of goods and services, and government consumption.  The reduced growth of Net Factor Income from Abroad (NFIA) from 13.4 percent in 2006 to 3.8 percent in 2007, the second lowest NFIA growth during the last nine quarters, pulled down the growth of the Gross National Product (GNP) to 6.6 percent which is lower by 0.3 percentage point than the GDP growth, from 6.3 percent last year.

The seasonally adjusted estimate of the GDP recorded a 2.5 percent growth in the first quarter of 2007, the third highest growth since 1995.  However, the reduced growth of the Net Factor Income from Abroad slowed down the seasonally adjusted Gross National Product growth to 0.9 percent, from a robust expansion of 3.1 percent in the previous quarter.

Economic growth continued to outpace population growth; thus, per capita GDP grew at a higher rate of 4.8 percent, the highest since the 4th quarter of 2004, from last year’s 3.6 percent; per capita PCE also accelerated to 3.8 percent from its year ago growth of 3.2 percent; and per capita GNP grew at a faster pace of 4.5 percent from 4.2 percent last year.

On the production side, the Services sector remained the linchpin in the economy and registered an impressive growth of 9.1 percent, the highest since 1983.  The Industry sector expanded at a steady rate of 5.3 percent while AFF grew by 4.2 percent.  In terms of contribution to GDP growth, the 6.9 percent growth in GDP came from Services, with 4.4 percentage points; Industry, 1.7 percentage points; and AFF with 0.8 percentage point.

The seasonally adjusted AFF bounced back with a 2.5 percent expansion after two uneventful quarters of flat and negative growths.  With all sub-sectors giving strong performances, the seasonally adjusted Industry sector accelerated to a robust 2.1 percent growth in the first quarter of 2007, from a 0.9 percent upturn in the preceeding quarter.  The seasonally adjusted Services sector, on the other hand, grew by 2.7 percent, slightly slower than the 3.0 percent increase in the previous quarter.

Despite the decline in the deployment of OFWs during the period, compensation inflow rose sharply from last year’s 3.4 percent to 14.0 percent.  This was however negated by the decline in the Property Income by 7.1 percent coupled with the soaring Property Expense by 25.7 percent that results in only a single digit growth of 3.8 percent in NFIA.