NSCB - First Quarter 2007 GNP

First Quarter 2007
Gross National Product &
Gross Domestic Product by Industrial Origin

Services continues to drive the economy

Services, with a share of 49.0 percent of total GDP, contributed the most to GDP growth with 4.4 percentage points. Major contributor to the sector’s growth were Trade, Transportation, Communication and Storage (TCS), Finance and Private Services. The same subsectors also recorded the fastest growth rates.

Communication propped up TCS performance

TCS grew at a faster rate from 6.9 percent in the previous year to 9.6 percent in 2007. The strong showing of the sector was largely attributed to the robust growths of Communication, and Land Transport. Land Transport rebounded from a 0.8 percent decline last year to a robust 10.0 percent expansion with the increased patronage of the rail system, particularly, the LRT, MRT and MEGATREN. Communication, rose by 10.1 percent, slower than last year’s 13.1 percent, due to the continued popularity of short messaging services (SMS) and wireless communication services.

The rest of the subsectors of Transport and Storage likewise surpassed their previous year’s growth with notable gains by Air Transport and by Storage and Services Incidental to Transport (SSIT). Air Transport recorded a higher growth of 7.3 percent than its year ago rate of 5.7 percent owing to stabilized oil prices and lower fare as a result of continued fare promotions offered by the domestic airlines and tourism-related promotion activities. SSIT likewise registered a faster growth of 8.0 percent from 1.3 percent last year.

Trade is biggest contributor to Services

Trade, which has the highest share among the Services sectors, accelerated its pace to 9.1 percent from 5.3 percent last year. The growth was propelled by the double-digit expansion of the retail industry by 12.1 percent from only 5.6 percent the previous year with the opening of new malls and department stores. Wholesale subsector, on the other hand, remained sluggish increasing by a measly 0.2 percent.

Strong performances of Banks and Insurance boost Finance’s growth

Finance registered a 13.4 percent growth, slightly lower than previous year’s growth of 14.6 percent. The growth was contributed largely by the combined strong performances of Banks which grew by 8.1 percent, and Insurance which soared to a double-digit expansion of 33.9 percent from a 2.0 percent upturn a year ago. Moreover, Non-Banks escalated to a 17.2 percent growth from a minimal 0.6 percent the previous year.

The overall sustained performance of Finance services was attributed to the downward trend in interest rates coupled with easing inflation and strong peso.

Real Estate Propels ODRE

Ownership of Dwellings and Real Estate (ODRE) stayed strong at 5.4 percent from a 3.4 percent growth in 2006. This was driven by the substantial improvement in the performance of Real Estate (RE) from 4.9 percent to 18.6 percent as sales/revenue from the country’s real estate major players posted double-digit growths. Ownership of Dwellings (OD), on the other hand, experienced a slower growth of 1.9 percent. ODRE was propped up by the rapidly increasing office space demand from BPO and information technology companies as well as the strong demand for residential houses sustained by overseas Filipino worker (OFW) remittances.

Business and Personal services buoyed up Private Services

The growth of Private Services picked up by 8.9 percent in 2007 from 7.7 percent in 2006. Highest contributor was the Business Services subsector which strengthened on the back of strong BPO growth. It rose by 14.7 percent, a little bit slower than last year’s 15.1 percent gain. Other top contributors include Personal Services, Hotels and Restaurant and Medical and Health.

As the country capitalized on the growing trend in medical tourism, performance of Personal Services, and Medical & Health Services subsectors were propped up. The recent trend on medical tourism was brought about by the rising cost of health care in the developed countries, coupled with improved medical technology and human resources in third world countries like the Philippines. Personal Services subsector rose at an accelerated rate of 7.5 percent while Medical and Health Services subsector increased sharply by 8.0 percent from last year’s growth of 2.4 percent. Hotels and Restaurants subsector also flourished growing from during the period with the holding of the 12th ASEAN Summit in Cebu City in January 2007.

Government services accelerate

The hiring of additional teachers and policemen and the filling up of newly created positions spurred the 7.1 percent expansion in Government Services from its previous year’s growth of 3.7.

GROSS VALUE ADDED in SERVICES
1st Quarter 2006 and 1st Quarter 2007
IN MILLION PESOS

At Constant 1985 Prices

INDUSTRY/INDUSTRY GROUP	1st Qtr 2006	1st Qtr 2007	Growth Rate (%)
SERVICE SECTOR	143,931	157,024	9.1
Transport., Communication and Storage	26,219	28,723	9.6
Trade	46,562	50,800	9.1
Finance	17,262	19,580	13.4
Occupied Dwellings & Real Estate	14,435	15,220	5.4
Private Services	25,501	27,763	8.9
Government Services	13,953	14,938	7.1

At Current Prices

INDUSTRY/INDUSTRY GROUP	1st Qtr 2006	1st Qtr 2007	Growth Rate (%)
SERVICE SECTOR	745,454	830,690	11.4
Transport., Communication and Storage	104,994	113,569	8.2
Trade	186,864	210,312	12.5
Finance	73,438	85,745	16.8
Occupied Dwellings & Real Estate	84,714	90,471	6.8
Private Services	192,859	219,519	13.8
Government Services	102,586	111,074	8.3

GROSS VALUE ADDED in SERVICES
2005 and 2006
IN MILLION PESOS

INDUSTRY	AT CURRENT PRICES			AT CONSTANT PRICES
INDUSTRY	2005	2006	Growth Rate (%)	2005	2006	Growth Rate (%)
SERVICE SECTOR	2,922,685	3,269,192	11.9	582,616	621,667	6.7
Transport., Communication and Storage	413,850	446,224	7.8	104,766	111,412	6.3
Trade	776,949	877,544	12.9	203,552	215,960	6.1
Finance	263,724	311,953	18.3	64,664	72,009	11.4
Occupied Dwellings & Real Estate	320,409	350,676	9.4	56,506	59,734	5.7
Private Services	741,984	830,152	11.9	100,373	107,316	6.9
Government Services	405,769	452,642	11.6	52,754	55,237	4.7

Source: National Statistical Coordination Board (NSCB)

Posted May 31, 2007.


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