Philippine economy slows down to a 4.6 percent GDP growth

The high inflation regime that prevailed during the second quarter coupled with the base effect of an election spending-fed growth last year took its toll on the Philippine economy as GDP rose by 4.6 percent, a considerable deceleration from the 8.3 percent increase recorded last year.  The uninspiring growth in GDP drew on the relatively strong performances of Manufacturing, Agriculture and Fishery, Trade, Private Services and Construction, but was adversely affected by the reversal in the Mining and Quarrying sector.  On the demand side, the good news is that growth is now led by exports and investments instead of household spending while government could not sustain the high level of consumption in the second quarter last year.  The continued inflow of remittances from overseas workers buttressed the NFIA, which went up by 14.1 percent, slower than the phenomenal 25.3 percent upswing last year, and pushed GNP by 5.5 percent from 9.8 percent in 2007.

The seasonally adjusted estimate of the GDP accelerated to 2.0 percent from 0.3 percent in the previous quarter.  Meanwhile, the seasonally adjusted GNP, which has been on a positive streak since the second quarter of 2003, jumped by 3.0 percent from 0.8 percent in the first quarter of 2008.

On the production side, the modest performances of Agriculture, Fishery and Forestry (AFF), growing by 4.9 percent, and Industry, at 4.8 percent, buoyed up the economy.  Meanwhile, Services posted its lowest growth of 4.3 percent since the third quarter of 2001.

The seasonally adjusted AFF sector rebounded to 3.7 percent after suffering a 1.0 percent contraction last quarter on account of substantial growths in Sugarcane, Corn, Banana and Palay.  Coming from a minimal 0.1 percent growth in the first quarter, Industry recorded its highest growth of 5.0 percent since the fourth quarter of 1989.  The robust performance of Industry was bolstered by the strong performances of Manufacturing, Construction and Electricity, Gas and Water.  Seasonally adjusted Services sector, on the other hand, registered a 0.5 percent contraction, the second largest decline since the first quarter of 1988, on account of the slow down in all its sub-sectors except Ownership of Dwellings and Government Services

As population reached an estimated 90.24 million, per capita GDP grew at a decelerated rate of 2.6 percent from 6.2 percent in the previous year while per capita GNP also went up at a lower rate of 3.5 percent from 7.6 percent.  Per capita PCE likewise increased slower at 1.4 percent from 3.6 percent.

Compensation inflow grew by 15.6 percent, its biggest since the first quarter of 2003, from 7.8 percent, and accounted for the biggest contribution to growth in the Net Factor Income from Abroad.  The combined effect of substantial Compensation Inflow, the decline in Property income by 27.6 percent and in Property expense by 2.4 percent sustained a double-digit growth of 14.1 percent in NFIA in the second quarter of 2008.