Philippine economy maintains high GDP growth at 6.6 percent

Fueled by the robust performances of Trade, Agriculture and Fishery, Private Services and Construction, the Gross Domestic Product (GDP) grew by 6.6 percent in the third quarter of 2007 surpassing its last year’s performance of 5.1 percent in the same quarter.  On the demand side, growth was driven mainly by increased household spending and complemented by increased investments in public and private construction and exports of non-factor services.  The continued accelerated growth in the Net Factor Income from Abroad (NFIA) at 25.2 percent pushed the Gross National Product (GNP) to a substantial 8.2 percent growth over the 5.6 percent in the same quarter last year.

While the third quarter performance of the Philippine economy recorded accelerated growth compared to the same period last year, the seasonally adjusted GDP indicated an easing off in growth from second quarter to third quarter of 2007.  The seasonally adjusted GDP posted a weaker growth of 0.3 percent compared to the 1.8 percent in the previous quarter, as all major industries posted lower growths compared to the second quarter.  The seasonally adjusted GNP likewise slackened, growing by 0.4 percent from 2.4 percent in the second quarter.  The vigorous growth in NFIA helped the seasonally adjusted GNP to a slightly higher growth than the seasonally adjusted GDP.

On the production side, GDP growth was backed by the solid performances of all major sectors which posted accelerated growths from their year ago rates.  The ever-resilient Services sector recorded a 7.2 percent expansion and contributed a significant 3.6 percentage points to the overall GDP growth.  This was followed by the Industry sector with a 6.1 percent increase and put in a lower but equally important 2.0 percentage points to the overall growth.  Likewise, the renewed vigor of Agriculture, Fishery and Forestry (AFF), which strengthened to 5.6 percent from 3.6 percent last year, added in a 1.0 percentage point contribution.

The seasonally adjusted AFF slowed down this quarter, recording a growth of 1.1 percent from 2.2 percent the previous quarter.  Services likewise failed to outstrip its previous quarter’s performance as shown by the further decline in the growth of its seasonally adjusted GVA from 1.0 percent in the second quarter to only 0.6 percent this quarter.  Industry, on the other hand, contracted by 0.7 percent from its second quarter level.  Last recorded contraction in the seasonally adjusted GVA of the sector was in the third quarter of 2004, also an election year, when it dropped by 0.1 percent from its second quarter level.

The expansion of the economy continued to outpace population growth in the third quarter as per capita GDP rose further by 4.5 percent from 3.1 percent last year.  Similarly, per capita GNP and per capita PCE sped up their tempo.  Per capita GNP went up by 6.1 percent from only 3.5 percent last year, while per capita PCE expanded by 3.6 percent from 3.1 percent last year.

Property income rose sharply by 68.2 percent on account of higher income from bond placements abroad of private corporations and increased income receipts out of interest on deposits abroad.  This upsurge in Property Income combined with the significant reduction by 21.1 percent in Property Expense led to the sustained double digit growth of 25.2 percent in NFIA from 11.2 percent last year.