NSCB - First Quarter 2007 National Accounts - Press Release - GDP GROWS AT A RECORD HIGH OF 6.9% IN SEVENTEEN YEARS

1st Quarter 2007
GDP GROWS AT A RECORD HIGH OF 6.9% IN SEVENTEEN YEARS
Posted 31 May 2007

Chart 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 NFIA slowed down the seasonally adjusted GNP 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 resulted in only a single digit growth of 3.8 percent in NFIA.

On the expenditure side, the continued upsurge in remittances of Overseas Filipino Workers (OFWs) boosted consumption, resulting in increased consumer spending at 5.9 percent in the first quarter of 2007 from 5.3 percent a year ago. Expenditure items that recorded accelerated growths were Food Expenditures, Miscellaneous Expenditure, Clothing & Footwear, Tobacco, and Fuel, Light & Water while Transportation and Communication, Household Operations, and Beverage exhibited decelerated growths. Only Household Furnishings suffered cut backs in expenditures.

Investments in Fixed Capital Formation improved its growth to 2.7 percent from 2.4 percent in the same period last year.

Sustaining the growth momentum of the four (4) quarters, Government Consumption Expenditure (GCE) accelerated to a 13.1 percent growth in the first quarter of 2007 from a 7.6 percent upturn the previous year.

Total merchandise exports grew by 10.3 percent from 11.4 percent in 2006. The top Merchandise Exports were Finished Electrical Machinery, Cathodes & Section of Cathodes of Refined Copper, Semiconductors & Electric Microcircuits, Other Products Manufactured, and Copper Concentrate. Exports of Non-Factor Services slackened to a growth of 3.6 percent from a stronger 21.2 percent in 2006.

Total Merchandise Imports slid to negative 3.4 percent from last year’s growth of 0.1 percent. Top Merchandise Imports were: Manufacture of Metals, Feeding Stuff, Machinery other than Electrical Machinery, Transport Equipment, and Chemical Elements & Compounds. Imports of Non-Factor Services went up by 11.6 percent from a 10.7 percent increase in the previous year.

During the first quarter of 2007, the terms of trade posted a Trade Index of 101.4 percent. This, however, was lower than the 108.3 percent posted in the same period last year. Trading Gains for the quarter amounted to P2.1 billion pesos.

GNP Implicit Price Index (IPIN) stood at 471.5 percent from 458.5 percent in the previous year or a 6.4 percent growth from 2006.

ROMULO A. VIROLA
Secretary-General, NSCB

(l-r) NSCB-ESO Dir. Raymundo J. Talento,
NSCB Sec. Gen. Dr. Romulo A. Virola,
Sec. of Socio-Economic Planning and NEDA Dir. Gen. Romulo L. Neri
NEDA-NPPS Dir. Dennis M. Arroyo
NEDA-DIS Asst Dir. Benjamin Turiano

Media covering the Press Conference

Highlights of the 1st Quarter 2007 National Accounts

Time Series Tables

Glossary of Statistical Terms on Economic Accounts


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