NSCB - Second Quarter 2007 National Accounts - Press Release - Philippine Economy Stronger at 7.5 Percent GDP Growth

Second Quarter 2007
Philippine Economy Stronger at 7.5 Percent GDP Growth
Posted 30 August 2007

Continued favorable economic conditions such as stable interest rates and strong peso, resilient agriculture sector, vibrant industry and services sectors, plus election-related spending and intensified infrastructure investments further strengthened 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 came from the strong performances of Trade, Construction, Transportation, Communication and Storage (TCS) and Manufacturing. On the demand side, sustained increase in household spending, rise in merchandise exports and investments in construction served as major engines of growth. Continued inflow of remittances from overseas workers resulted in a hefty 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 th Chart e 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. 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 Overseas Filipino Workers (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.

On the expenditure side, consumer spending increased by 6.0 percent in the second quarter of 2007 from 5.4 percent a year ago boosted by the continued upsurge in compensation of OFWs. Expenses for Fuel, Light and Water rebounded to a growth of 6.0 percent from negative 2.2 percent registered in 2006. Other expenditure items that recorded higher growths during the quarter were: Beverages, up by 4.8 percent from negative 1.8 percent; Clothing and footwear, rose by 5.6 percent from 1.6 percent; Miscellaneous expenses, grew by 6.1 percent from 3.8 percent; and, Food expenditure, which accounted for 52.7 percent of total Personal Consumption Expenditure (PCE), maintained the growth of 6.4 percent.

General government consumption expenditure soared to 13.5 percent in the second quarter of 2007 from 3.3 percent in the same quarter the previous year. The big boost was attributed to election related expenditures.

Investments in Fixed Capital Formation rebounded to 10.0 percent from negative 1.0 percent in 2006.

Total Merchandise Exports grew by 5.9 percent from 21.7 percent last year. The top five contributors to the growth were: Finished Electrical Machineries, Semi Conductors and Electric Microcircuits, Transmission Apparatus, Prepared Tuna and Liquefied Petroleum Gas. Exports of Non-Factor Services, on the other hand, plunged to 4.6 percent from a growth of 18.8 percent a year ago.

Total Merchandise Imports skidded to negative 12.3 percent from a growth of 4.1 percent in the previous year, as Principal Merchandise Imports suffered a reversal of negative 17.9 percent from a growth of 1.3 percent in 2006. The only contributors to the growth of Principal Merchandise Imports were Manufactures of Metals and Dairy Product as both posted turn around growths of 30.4 percent and 22.4 percent, from negative 0.8 percent and negative 9.4 percent, respectively. Imports of non-factor services, on the other hand, grew by 9.7 percent from 2.8 percent in the previous year.

During the quarter, the terms of trade posted a Trade Index of 91.2 percent. This however was lower than the 101.3 percent registered the previous year. Trading gains for the quarter amounted to P1.6 billion as against the trade deficit of P39.0 billion registered in the same period last year.

GNP Implicit Price Index (IPIN) stood at 473.5 percent from 462.1 percent in the previous year or a 2.5 percent growth from 2006.

ESTRELLA V. DOMINGO
OIC, Office of the Secretary-General, NSCB
and Assistant Secretary General

Highlights of the 2nd Quarter 2007 National Accounts

Time Series Tables

Glossary of Statistical Terms on Economic Accounts