Philippine economy stronger at 7.5 percent GDP growth

Continued favorable economic conditions characterized by stable interest rates and strong peso, resilient agriculture sector and exports, election-related spending and hike in infrastructure investments, propelled the country’s Gross Domestic Product (GDP) to an impressive 7.5 percent growth in the second quarter of 2007 from 5.5 percent last year.  The expansion in GDP drew strength from the strong performances of Trade, Construction, Transportation, Communication and Storage (TCS) and Manufacturing.  On the demand side, sustained increase in household spending, merchandise exports of goods, and investments in construction served as major engines of growth.  Continued inflow of remittances from overseas workers resulted in a vibrant 16.6 percent expansion in the Net Factor Income from Abroad (NFIA) and pushed the Gross National Product (GNP) to an 8.3 percent growth, a substantial improvement over the 6.4 percent growth in the same quarter last year.

The seasonally adjusted estimate of GDP posted a 1.7 percent growth in the second quarter of 2007.  Moreover, the continued growth in the Net Factor Income from Abroad drove the seasonally adjusted Gross National Product to a robust growth of 2.3 percent.

On the production side, the Services sector remained the key player in the economy as it registered a strong growth of 8.4 percent.  Industry likewise kept the economy buoyed, up by an equally hefty 8.0 percent growth, while Agriculture, Fishery and Forestry (AFF) maintained its upward trend expanding by 3.9 percent amidst unfavorable weather conditions.  In terms of contribution to GDP growth, the 7.5 percent growth in GDP came from Services, with 4.1 percentage points; Industry, 2.7 percentage points and AFF with 0.7 percentage point.

The seasonally adjusted AFF showed resiliency, expanding by 1.7 percent, albeit at a slower pace than the previous quarter, owing to the steady growths of Fishery, Banana, Palay and Livestock.  Industry remained on track with a robust growth of 3.0 percent, from 2.7 percent in the first quarter.  Likewise, the Services sector continued to grow but at a much slower pace of 0.9 percent compared to 2.5 percent the previous quarter.

Per capita GDP grew at an accelerated rate of 5.4 percent from 3.4 percent in the previous year while per capita GNP went up further at a higher rate of 6.2 percent from 4.3 percent.  Per capita PCE increased faster at 3.9 percent from 3.3 percent.

The continued deployment of OFWs during the period resulted in the 7.8 percent expansion in compensation inflow from 4.8 percent last year.  This, together with the combined effect of the significant growth in Property income by 26.3 percent and the decline in Property expense by 8.8 percent led to the sustained double-digit and accelerated growth of NFIA.