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

Third Quarter 2007
PHILIPPINE ECONOMY MAINTAINS HIGH GDP GROWTH AT 6.6 PERCENT
Posted 29 November 2007

chart 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, complemented by increased investments in public and private construction and a huge jump in exports of non-factor services. The continued accelerated growth in the Net Factor Income from Abroad (NFIA) at 25.2 percent, the highest since the third quarter of 2003, pushed the Gross National Product (GNP) to a substantial 8.2 percent growth from 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 as it posted a weaker growth of 0.3 percent compared to the 1.8 percent in the previous quarter. The seasonally adjusted GNP likewise slackened, growing by 0.4 percent from 2.4 percent in the second quarter.

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 coming from bond placements abroad of private corporations and increased income receipts 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.

On the expenditure side, consumer spending expanded by 5.6 percent in the third quarter of 2007 from 5.2 percent a year ago. All sub sectors of Personal Consumption Expenditures posted growths except for household furnishing. Food expenditures, which accounted for 53.5 percent of total PCE, accelerated to 6.3 percent from 6.0 percent registered in 2006, contributing 3.4 percentage points to total PCE growth. Miscellaneous Expenditures grew by 5.6 percent from 4.6 percent; Transportation/Communication, posted a lower growth of 9.1 percent from 13.3 percent; Fuel, Light & Water, expanded by 7.1 percent from a negative 2.4 percent growth; and, Household Operations up by 1.9 percent from 2.6 percent.

Government Consumption Expenditures rose to 8.3 percent in the third quarter of 2007 from 4.5 percent in the same period last year brought about by the continued implementation of government projects which was made possible by higher revenue flows. Higher maintenance spending was likewise recorded due to higher allocations for operating expenses.

Investments in Fixed Capital Formation rose to 8.9 percent from 2.1 percent growth in 2006.

Total Merchandise Exports reversed its trend to negative 7.5 percent in the third quarter of 2007 from 10.5 percent in the same period last year.

The top five contributors to the growth of Merchandise Exports were: Finished Electrical Machinery which maintained its growth of 8.3 percent; Semi conductors and Electric Microcircuits, decelerated to 4.7 percent from 5.1 percent; Crude Coconut Oil, which recovered from negative 42.5 percent growth to 14.6 percent; Liquefied Petroleum Gas, which jumped to 473.2 percent from negative 49.4 percent; and, Other Products Manufactured, which slowed down to 8.5 percent from 56.5 percent. Exports of Non-Factor Services, on the other hand, accelerated to 13.7 percent in the third quarter of 2007 from 1.0 percent a year ago.

Total Merchandise Imports showed signs of weakening as it reversed its growth to negative 7.9 percent from a minimal growth of 0.8 percent in the previous year. The top five contributors to the growth of Merchandise Imports were: Mineral Fuels, Lubricants and Related Materials, which recovered to a modest growth of 6.4 percent from negative 11.1 percent; Cereals and Cereal Products, up by 11.1 percent from negative 8.7 percent; Dairy Products, which grew by 24.4 percent from 31.7 percent; Chemical elements and compounds, expanded by 3.4 percent from negative 0.7 percent; and Manufactures of metals which grew by 2.3 percent from 28.1 percent in the previous year. On the other hand, imports of non-factor services continues to gain strength with a higher growth of 26.0 percent in the third quarter of 2007 from 8.4 percent in the previous year.

During the quarter, the terms of trade posted a lower Trade Index of 85.9 percent as the price index of imports (i.e., 464.80) exceeded the price index of exports (i.e. 399.44). Trading Losses during the quarter amounted to P25.2 billion pesos.

GNP Implicit Price Index (IPIN) stood at 487.3 percent from 477.1 percent in the previous year or a 2.1 percent growth from 2006.

ROMULO A. VIROLA
Secretary General, NSCB

(l-r) NSCB Asst. Sec. Gen. Estrella V. Domingo, NSCB Sec. Gen. Romulo A. Virola,
NEDA Acting Dir. Gen. Augusto B. Santos and NEDA-NPPS OIC-Dir. Myrna Clara Asuncion

Media covering the press conference.

Highlights of the 3rd Quarter 2007 National Accounts

Time Series Tables

Glossary of Statistical Terms on Economic Accounts