NSCB - 1stQuarter 2008 National Accounts - Press Release

Economy slackens to 5.2 percent

After a four-quarter streak of pleasantly surprising performance, the Philippine economy succumbed to rising oil prices, the slowdown in the US economy and the negative effects of a strong peso. While definitely not in the brink of an economic slowdown, first quarter 2008 GDP slackened to 5.2 percent from its previous year’s performance of 7.0 percent. Growth this quarter was boosted by the solid performance of Trade, Finance and Transportation, Communication and Storage (TCS). On the expenditure side, main growth drivers were Personal Consumption Expenditure (PCE), Durable Equipment (DEQ) and Construction. Growth of Net Factor Income from Abroad (NFIA) almost tripled at 30.3 percent from only 11.3 percent last year, pushing GNP to grow 2.1 percentage points higher than the GDP at 7.3 percent.

The seasonally adjusted GDP slowed down to 0.8 percent from 1.3 percent in the previous quarter on account of the reversal suffered by Agriculture Fishery and Forestry, which declined by 0.8 percent from positive 0.5 percent in the previous quarter, and the slackened growth of Services from 2.0 percent in the previous quarter to 1.3 percent in the present quarter. Meanwhile, the seasonally adjusted GNP, which has been on a positive streak since the second quarter of 2003, regained momentum to 2.1 percent from 0.8 percent in the fourth quarter of 2007 due to the sturdy performance of the Net Factor Income from Abroad.

On the production side, the Services sector remained the strongest registering a robust growth of 6.9 percent, albeit slower than the 8.4 percent gain the previous year. The Industry sector likewise expanded at a decelerated rate of 3.9 percent from 6.6 percent in 2007 while AFF slowed down to 3.0 percent from 4.0 percent last year. In terms of contribution to GDP growth, the 5.2 percent growth in GDP came from Services, with 3.3 percentage points; Industry, 1.3 percentage points; and AFF with 0.6 percentage point.

On a seasonally adjusted basis, AFF contracted by 0.8 percent in the first quarter after seven consecutive quarters of positive growths as Fishery slowed down while Other Crops registered substantial decline. On the other hand, Industry outstripped its previous quarter's performance, growing at a slightly higher rate of 0.8 percent from the 0.5 percent gain in the last quarter. Meanwhile, the Services sector continued to exhibit a robust growth of 1.3 percent, albeit lower than the 2.0 percent recorded in the last quarter, as Finance, Trade, and Transportation, Communication & Storage put in a solid performance.

Economic growth continued to outpace population growth; thus, per capita GDP grew by 3.1 percent, albeit at a slower pace than last year’s 4.9 percent; per capita PCE likewise slightly reduced its pace to 3.1 percent from its year ago growth of 3.8 percent; but per capita GNP expanded amazingly at 5.2 percent.

The NFIA growth of 30.3 percent was brought about by the double-digit growth of 22.8 percent in Property Income, a turnaround from last year’s negative 6.1 percent, combined with the significant reduction by 23.1 percent in Property Expense and continued growth in Compensation inflow at 7.2 percent.