NSCB -2nd Quarter 2008 National Accounts - Press Release - Philippine economy slows down to a 4.6 percent GDP growth

Second Quarter 2008
PHILIPPINE ECONOMY SLOWS DOWN TO A 4.6 PERCENT GDP GROWTH
Posted 28 August 2008

Chart 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.

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.

On the expenditure side, consumer spending slackened to 3.4 percent from 5.6 percent a year ago, as it succumbed to the effect of high prices.

General government consumption expenditure slipped to negative 5.1 percent in the second quarter of 2008 from 11.9 percent in the same quarter the previous year.

Investments in Fixed Capital Formation grew at a sluggish rate of 5.6 percent compared to its 20.9 percent upswing last year. The robust growth of Private Construction by 25.0 percent from 13.7 percent a year ago kept Total Construction afloat with an 8.1 percent growth, albeit slower than the 34.4 percent expansion last year. Public Construction, on the other hand, experienced a reversal in its double-digit growth of 59.4 percent last year to a 6.4 percent decline this year as capital outlay for public works decreased. Meanwhile, Durable Equipment slowed down to a growth of 4.0 percent from 8.8 percent in the previous year. Increased investments were registered in thirteen (13) out of the twenty (20) types of fixed assets.

Total Exports accelerated to 7.7 percent from 4.9 percent last year resulting from the hefty increase in Non-Merchandise Exports at 18.3 percent from negative 1.4 percent. Meanwhile, driven by the increases in Garments and Cathodes & Section of Cathodes of Refined Copper, Total Merchandise Exports posted a growth of 5.5 percent, slower than the 6.3 percent last year.

Total Merchandise Imports continued to decline but at a slower pace, that is, from negative 11.6 percent to negative 2.5 percent while Imports of Non-Factor Services almost doubled its pace as it grew at a higher rate of 21.6 percent from last year’s 12.0 percent.

Total Exports (Merchandise and Non-factor Services) for the quarter, valued at P729.2 billion pesos at current prices, exceeded Total Imports (Merchandise and Non-factor Services), valued at P719.4 billion pesos, resulting in a trade surplus of P9.8 billion pesos. In the same period last year, trade balance posted a surplus of P27.0 billion pesos. The current trade surplus stood at 0.5 percent of GNP from last year’s surplus of 1.5 percent.

The terms of trade during the quarter posted a trade index of 82.5 percent. This was lower than the trade index of 92.1 percent a year ago.

GNP Implicit Price Index (IPIN) stood at 512.97 percent from 473.46 percent in the previous year or an 8.3 percent growth from 2007.

ROMULO A. VIROLA
Secretary-General, NSCB

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