NSCB -1st Quarter 2008 National Accounts - Press Release - PHILIPPINE ECONOMY SOARS TO 7.4% GDP GROWTH

First Quarter 2008
PHILIPPINE ECONOMY SLACKENS TO 5.2%
Posted 29 May 2008

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. Net Factor Income from Abroad (NFIA) growth 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 (AFF), 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 Agriculture, Fishery and Forestry (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.

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.

On the expenditure side, the continued rise in prices resulted in lower consumer spending at 5.1 percent from 5.9 percent a year ago.

Government Consumption Expenditure (GCE) slipped to negative 1.0 percent in the first quarter of 2008 from 9.5 percent in the previous year due to lower expenditures compared to last year which was an election year.

Investments in Fixed Capital Formation in the first quarter of 2008 grew by 7.3 percent from 8.7 percent in the same period last year. Increased investments in residential assets sustained the double-digit growth of Private Construction to 15.1 percent from 21.3 percent in 2007. On the other hand, Public construction after posting positive growths for the last two years slipped to negative 9.5 percent from 18.9 percent the previous year slowing down the growth of total investment in construction by 6.1 percent from 20.4 percent the previous year. Investments in Durable Equipment improved to 8.2 percent from 4.3 percent a year ago. Increased investments were registered in thirteen (13) out of the twenty (20) types of equipment.

Still reeling from the crisis faced by the US economy, total Exports plunged to negative 11.1 percent from positive 10.8 percent last year as both Merchandise Exports and Non-Factor services registered negative growths in the first quarter of 2008

Total Merchandise Imports slipped further to negative 7.4 percent in the first quarter of 2008 from last year’s growth of negative 3.0 percent while Imports of Non-Factor Services grew by 3.0 percent from 14.5 percent in the previous year

Total Imports (Merchandise and Non-factor Services) for the quarter, valued at P666.9 billion pesos at current prices exceeded Total Exports (Merchandise and Non-factor Services), valued at P625.6 billion pesos, resulting in a trade deficit of P41.3 billion pesos. In the same period last year, trade balance posted a surplus of P51.3 billion pesos. The current trade deficit stood at 2.3 percent of GNP from last year’s surplus 3.1 percent.

The terms of trade resulted in a Trade Index of 93.2 percent, which was lower than the 101.9 percent posted in the same period last year. Trading losses for the quarter amounted to P9.9 billion pesos.

GNP Implicit Price Index (IPIN) stood at 495.1 percent from 472.0 percent in the previous year or a 4.9 percent inflation.

ROMULO A. VIROLA
Secretary-General, NSCB

Highlights of the 1st Quarter 2008 National Accounts

Time Series Tables

Glossary of Statistical Terms on Economic Accounts